After striking highs of 1.3263 Tuesday, its highest daily close in nearly four months, the USD/CAD came under pressure. Weighed on by broad-based USD selling, the H4 candles successfully faded a nearby Quasimodo resistance at 1.3260. Additional confluence supporting a move lower from the H4 Quasimodo resistance is the ABCD approach (black arrows) that terminated around 1.3251, the nearby channel resistance (extended from the high 1.3132) and the RSI indicator testing overbought territory.
Further supporting a downside move from the aforementioned H4 Quasimodo resistance was the level also represented daily resistance as well. From the daily scale, movement lower could potentially stretch as far south as trend line support (extended from the low 1.2782).
Well done to those who sold 1.3260, as this was a noted level to keep eyes on in Tuesday’s briefing. Reducing risk to breakeven at this point is certainly an option.
Areas of consideration:
As highlighted in yesterday’s report, the initial downside target from 1.3260 rests around the 1.32 handle. Following this, November’s opening level at 1.3158 is next in line.
Unless a second retest of 1.3260 is observed in the shape of a bearish candlestick formation today, there’s little in terms of tradable opportunity seen. To short from 1.3260, stop-loss placement remains best positioned above the H4 channel resistance (around 1.3285ish).
Today’s data points: US CPI m/m/Core CPI m/m; FOMC Member Quarles Speaks.
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