In recent activity, the US dollar pressed higher against its Canadian counterpart. Offers at the H4 mid-level resistance 1.2150 were consumed, allowing the unit to tap a high of 1.2189 into the closing bell. The important thing to consider here, however, is the H4 AB=CD bearish formation topping at 1.22 (H4 Fib ext. point at 127.2%), which boasts a H4 38.2% Fib resistance also at 1.22. This – coupled with a daily broken Quasimodo line at 1.2201, makes 1.22 a very interesting sell zone.
The only grumble we see is the fact that weekly price recently connected with demand printed at 1.1919-1.2074. While this is obviously a concern and could potentially damage a 1.22 sell, we remain biased to the downside due to the pair’s strong downtrend in play since May. In addition to this, we have a nearby weekly resistance plotted on the USDX weekly chart at 11854, which could help in pushing the dollar lower.
Suggestions: Despite weekly demand in play, we are going to sell 1.22 with a stop planted 20 pips above at 1.2220. Should this come to fruition before our EUR pending sell is triggered at 1.2005, we will cancel this order and focus on the CAD. The first area of interest, should the trade move into favor, is 1.2150.
Data points to consider: US PPI data at 1.30pm. US Crude oil inventories at 3.30pm GMT+1.
IC Markets is an online forex broker specialized in providing transparent trading solutions to both retail and institutional investors alike. We provide superior execution technology, lower spreads and unrivaled liquidity.