USD/CAD Outside Day Reversal Off Key Support- Long Scalps in Play
- USDCAD to post key outside-day reversal off support
- Long scalps favored above 1.2511/37
- Updated targets & invalidation levels
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: USDCAD is set to post an outside-day reversal candle off a key support confluence at 1.2511/37. This region is defined by the 78.6% retracement of the May 2015 advance, the 38.2% retracement of the broader 2007 advance and former trendline resistance extending off the 2002 high. While it’s too early to tell if this level will ultimately mark a more significant low, for now we’ll take a constructive outlook on the pair while above this critical support zone.
Note that daily momentum is coming up on a former support trigger (now resistance) and a breach here would further reinforce the notion of a larger recovery. Initial areas of interest for resistance is up at the October low-day close at 1.2861 followed by a basic 23.6% retracement of the decline off the 2016 high at 1.2986.
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Notes: The pair is now testing a short-term trendline resistance extending off the 4/7 high with a breach targeting subsequent topside objectives at the 1/26 trendline / 1.2779 & 1.2861/77.A breach above 1.2976/81 is needed to validate a more significant reversal n shifts the broader focus back towrads the April highs.
That said, I’d be looking for near-term exhaustion / failure here to offer pullbacks / long-triggers while above 1.2559 with our bullish invalidation level set to today’s lows at 1.2460. A breack below this level would likely see accelerated losses for the pair with such a scenario targeting 1.2422 & 1.2316.
Added caution is warranted heading into the end of the week with both U.S. & Canadian employment figures on tap and the releases are likely to fuel increased volatility in their respective crosses. A quarter of the daily average true range (ATR) yields profit targets of 31-34 pips per scalp. 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 the close of the week.
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Relevant Data Releases
Other Setups in Play:
- AUD/USD Scalp Targets Ahead of RBA- Watch 7590
- USDOLLAR at Critical Inflection Point Heading Into May Open, NFPs
- CAD/JPY Bearish Below March High; Break Sub-84.57 Fuel Losses
- USDOLLAR Rebound at Risk Ahead of CPI- 11905 Resistance
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.