USD/CAD: Technical outlook and review.

FX:USDCAD   U.S. Dollar / Canadian Dollar
Weekly Timeframe: Last week saw the USD strengthen against the CAD consequently forcing the market to close (1.15736) around a weekly supply area coming in at 1.17225-1.15417 (located within a larger weekly supply area seen at 1.18061-1.14739). Let’s see what the lower timeframes have to say about this.

Daily Timeframe: It was reported in Friday’s analysis that price had closed above a major daily swap level coming in at 1.14861 on Thursday, which informed us that higher prices would likely follow. And as we can all see further buying was indeed seen slightly closing above a channel resistance. We feel that there is a good chance a continuation move will be seen today and possibly into tomorrow towards a daily supply area coming in at 1.17225-1.16182 (located deep within the weekly supply area mentioned above at 1.17225-1.15417), before we see any serious selling activity.

4hr Timeframe: Unfortunately, Due to lack of historical data, we’re unable to see what the 4hr price action is like in the past. We don’t feel that this will hinder our analysis though since we know where we are located in the bigger picture.

The 4hr timeframe shows that price is trading around a channel resistance at the moment, and with the psychological level 1.16 looming just above, a correction may be seen before prices reach the aforementioned daily supply area.
With all of the above taken into consideration, we feel there is a good chance the following will take place this week:

1. Price will rally towards 1.16.
2. A bearish reaction will likely be seen, where one could potentially enter short here around the 1.15968 mark for a bounce trade – lower-timeframe confirmation is recommended.
3. Assuming 1, and 2 happen, a large amount of traders will see red candles on the 4hr chart and enter short believing that a big move south is on the cards, and they could be right since price is currently seen dancing around weekly supply (see above) at the moment.
4. We however feel there is a good chance that once a reaction is seen there, and a ton of traders are short the market expecting it to drop forever, pro money will cause confusion by buying into all these sells and push prices up to the aforementioned daily supply area, which is where we believe an overall larger move south will be seen.

Current buy/sell levels:

• Buy orders: Flat (Predicative stop-loss orders seen at: N/A).

• Sell orders: 1.15968 (Predicative stop-loss orders seen at: Dependent on where one confirms the level).

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