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Talking Points:
- USD/CAD Strategy: Flat, Waiting to Buy
- Candle Pattern Sub-1.28 Hints at Topping
- Deeper Losses Seen After Support Break
The US Dollar appears to have carved out an interim top below the 1.28 figure against its Canadian counterpart. Prices snapped ten weeks of consecutive gains with the formation of a bearish Dark Cloud Cover candlestick pattern. While follow-through has been tepid it has materialized nonetheless, with a break below the 14.6% Fibonacci retracement at 1.2480 hinting at deeper losses in the cards ahead. The next layer of weekly support comes in at 1.2284, the 23.6% level, with a push below that targeting the 38.2% Fib at 1.1966.
The dominant trend has broadly favored the upside since September 2012. With that in mind, we will look to on-coming losses as an opportunity to enter long once the current correction appears to have run its course rather than a stand-alone short trade setup.
Weekly Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
