USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance
Chart Created Using FXCM Marketscope 2.0
- USDCAD monthly opening range in focus ahead of BoC
- Interim support 1.3138 (monthly open) backed by 1.3063 (bullish invalidation)
- Resistance at 1.3288 (reversal-day close) backed by 1.3335 (HDC) (bearish invalidation)
- Daily RSI in consolidation – Divergence into the highs- bearish
- Pending momentum support / resistance triggers in play
- Key Event Risk Ahead: Bank of Canada Rate Decision tomorrow & U.S. University of Michigan Confidence on Friday
Notes: Loonie is carving out a well-defined monthly opening range heading into tomorrow’s Bank of Canada interest rate decision. Divergence into the highs alongside the recent rebound in crude prices puts the long-side at risk near-term with resistance seen at the August 26th daily reversal-close backed by our bearish invalidation level at the 2015 high-day close at 1.3335. A breach above this level is needed to keep the long bias in play targeting 1.34 & the key 61.8% retracement of the 2002 decline at 1.3457.
Soft support rests at 1.3170 with a break below the monthly open at 1.3138 shifting the focus to the downside targeting 1.3104 & confluence support into 1.3064. Note that a quarter of the daily average true range (ATR) yields profit targets of 34-36 pips per scalp. Caution is warranted heading into the BoC with the release likely to fuel added volatility in the CAD crosses. We’ll be closely eyeing crude prices with a hold above 42.15 (march lows & 61.8% retracement of August advance) further supporting the case for some pullback of some magnitude in USDCAD.
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Relevant Data Releases
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---Written by Michael Boutros, Currency Strategist with DailyFX
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