Weekly closing price: 1.2906
Weekly opening price: 1.2950
Weekly view: Last week’s action saw the USD/CAD correct sharply higher from support penciled in at 1.2538, pushing price above resistance seen at 1.2833 (now acting support) by the close. If the bull-side of this market continues to dominate, further upside could be seen towards resistance coming in at 1.3381. There is some supply seen in between these two areas, but not really something that could hamper further buying in our opinion. The reason being simply comes down to the supply consumption wick seen marked with a red arrow at 1.3218.
Daily view: From this angle, we can see that price closed the week a few pips above the broken Quasimodo level at 1.2900. However, after this morning’s relatively large gap north of around forty or so pips this line will likely act as support going forward. With that being the case, the Loonie could advance north up to a sturdy-looking coming in at 1.3218-1.3086 in the days ahead.
H4 view: The H4 on the other hand is, at the time of writing, seen kissing the underside of supply at 1.2989-1.2947. Sellers defended this level beautifully during the NFP shenanigans on Friday, forcing the U.S. dollar back down to the 1.2900 handle. In light of what we’re currently seeing on the higher-timeframe picture (see above) we do not hold much faith in this supply right now. A more likely scenario that we feel could take place is a whipsaw through this supply to connect with the large psychological resistance 1.3000. Again though, due to what the higher timeframes are suggesting, the bounce from here could be limited!
On account of the above points here is our plan going into the week’s sessions:
• Watch for a reaction at 1.3000. Should the lower timeframes chalk up a suitable setup to short from here, we would likely sell on a scalp and see basis. What we mean this is simply watch how price action behaves once we’re live – for example, if a lower timeframe holds price repeatedly, we know this is a sign to close up shop…
• Should the H4 close above 1.3000 today/this week, it’s likely the Loonie is then heading up to 1.3062 – a broken Quasimodo line. Therefore, if price retests 1.3000 together with some form of lower timeframe buy signal, a long from number is high probability in our opinion.
In regards to confirmation, this could be in the form of an engulf of supply/demand and subsequent retest, a break/retest of a or simply a collection of buying/selling tails/wicks around a lower-timeframe .
Levels to watch/live orders:
• Buys: Watch for price to close above 1.3000 and look to trade any retest seen thereafter (lower timeframe confirmation required).
• Sells: 1.3000 region Tentative – confirmation required (Stop loss: dependent on where one confirms this area).