Yesterday USD/CAD has fallen into 1,083 levels just above the green marked on my H4 chart, there's also 50% Fibo retracement of current Leg Up from 1,062 to 1,10 level present there just above 1,08 level and Stop Loss for that Long entry is placed just below 1,08 handle.
Violating 1,0865 previous swing low bottom yesterday wasn't an good thing for bulls but as long as 1,08-1,083 level stands I'd be buying Loonie.
Last days Dip has few reasons..
To start with there are technicals, 1,10 level worked as hard ressistance. Tripple or even quadruple top present just below 1,10 had to give us some down action.
But there are way more Fundamental reasons for that freefall. Most of thoose are a little bit fishy that's another thing why I don't belive in that down move continuation
- There are talks that Canadian GDP might be published way above forecasts (2,5-2,7% YoY), for example Citi claims that they see it at 5% YoY with export boosting it in last months.
- There's Tim Hortons & Burger King deal on the table which has strenghtens CAD in two ways, first there will be CAD buying to pay Tim Hortins share holders and second that makes Canada an possible place for other comapnies that wants to "enchance" the way they pay taxes :) But that's not somthing that You can build an long lasting CAD rally on.
- There are also some capital flows conected with month end position clearing and Oil flows which supported CAD in last days and stoped US Dollar rally all over the board.
There's also todays USA GDP data which should boost US Dollar as with the Durable Goods orders revision for last month of Q2 there are bigger chances for an reading above 4% Q/Q and upvard revision of first reading.