USD/CAD Low in Place? Breach Above 1.3240 to Confirm
- USDCAD Rebounds off key support on divergence- constructive
- Immediate focus high while within ascending median-line formation
- Updated targets & invalidation levels
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: USDCAD rebounded off key confluence support at 1.2965/77 late-last week- this region is defined by the 100% extension of the decline off the 2016 high, the 61.8% retracement of the advance off the May low & median-line support of the operative descending channel formation. Daily momentum divergence into this low backed by a breach of the weekly opening-range shifts the near-term focus to the long-side.
The pair is now eyeing near-term resistance at 1.3218/20 / channel resistance with a breach here eyeing subsequent topside targets at the 200-day moving average at 1.3329 and key resistance at 1.3419/61. A break below key support invalidates the reversal idea with such a scenario targeting support objectives at the October low-day close at 1.2861 backed closely by the median-line and a broader 38.2% retracement of late 2007 advance at 1.2537/70.
Avoid the pitfalls of near-term trading strategies by steering clear of classic mistakes. Review these principles in the "Traits of SuccessfulTraders” series.
Notes: Immediate resistance stands at the confluence of last week’s open, the 61.8% retracement of last week’s range and a sliding parallel extending off the 3/17 U.S. session high at 1.3218/20. Although we’re likely to get some kickback off this mark, the broader near-term outlook remains weighted to the topside while above the median-line extending off the lows with a breach higher targeting the 100% extension at 1.3243 backed by the 1.33-handle and a basic 23.6% retracement of the 2016 range at 1.3339.
Interim support rests at 1.3160/66 backed by the median-line / 1.3106. A break sub-1.3030/36 invalidates the topside bias with a break below key support at 1.2967/81 needed to validate continuation of the braoder downtrend. A quarter of the daily average true range (ATR) yields profit targets of 39-44 pips per scalp. Added caution is warranted heading into the close of the week with U.S. durable goods orders tomorrow likely to fuel volatility in the dollar crosses. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
Check out SSI to see how retail crowds are positioned as well as open interest heading into March trade.
Looking for trade ideas? Review DailyFX’s Top Trading Opportunity of 2016
Relevant Data Releases
Other Setups in Play:
- GBP/JPY Into Support Ahead of UK Retail Sales, Japanese CPI
- GBP/USD Eyes March High on Sticky UK CPI- Bullish Invalidation 1.4174
- Webinar: USD Crosses in Focus Post FOMC- Reprieve to be Short-Lived
- USD/CAD Sentiment Hits Extremes Ahead of CPI- 1.2965 Critical Support
- AUD/USD Post-FOMC Rally at Risk Ahead of Australian Labor Report
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.