USD/CAD Technical Analysis: BoC Moves Pair To Critical Resistance
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-USD/CAD Technical Strategy: Short-Entry Setting Up
-Price in Resistance Zone near 1.3080-1.3150
-Fibonacci / Moving Average Confluence at 1.3110/15
The Canadian Dollar broke down against the US Dollar by ~1.1% after the Bank of Canada revised their GDP forecasts for 2016 & 2017 lower. Larger focus remains on the breakdown of a 4-month rising channel with a ~600 pip decline. From Mid-October, we’ve seen a small move higher that rose with strong momentum. Now, we’re coming into key resistance that could set up the answer as to whether a decline is upon us, or a test of September highs is around the corner.
A lot of levels are lining up at 1.3110/15 showing that resistance may be near. First, the 21-day moving average sits at 1.3114, while the 1.618% Fib extension and 38.2% Fibonacci Resistance lie around 1.3110 & 1.3115 respectively. Above 1.3110/3115 opens up 50% of the range at 1.3145. Additionally, the red median line on the chart below comes into this zone as well. That being said, if we’re to see a strong turn lower in the direction of the initial ~600 pip drop, this is a good place for the resumption to happen. Because price broke below 1.2950, the confidence of the longer-term uptrend is quickly waning.
This Friday, we’ll have the last major news event out of Canada in the CPI report. The Bank of Canada seemed optimistic at first glance, but the downward GDP revisions were blamed for the move higher, and that could be a foresight into a weak CPI print. A strong print would turn focus to key support at 1.2936, which would negate the bullish view for many and encourage my preference for a bearish resumption. T.Y.
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