USD/CAD pushes for monthly S1
The slight period of consolidation apparent on Friday morning was disrupted significantly by the combined data release from the US and Canada mid-session. The rate fell 136 pips and thus reached a new three-and-a-half-month low at 1.2372. This fall was followed by a minor recovery until the monthly S1 at 1.2423.
Technical signals show mixed results. On the one hand, it seems that their gradual recovery marks the existence of upside potential. Its magnitude, however, is likely to be limited by the 55– and 100-hour SMAs and the 23.60% Fibo retracement circa 1.2475.
On the other hand, further weakness of the US Dollar is still possible, as bulls have not yet managed to pick up speed after such a notable decline. Thus, bears might eventually overcome bulls and force the pair lower down to the weekly S1 at 1.2320.
Technical signals show mixed results. On the one hand, it seems that their gradual recovery marks the existence of upside potential. Its magnitude, however, is likely to be limited by the 55– and 100-hour SMAs and the 23.60% Fibo retracement circa 1.2475.
On the other hand, further weakness of the US Dollar is still possible, as bulls have not yet managed to pick up speed after such a notable decline. Thus, bears might eventually overcome bulls and force the pair lower down to the weekly S1 at 1.2320.
Comment:
Tuesday’s trading session confirmed that the US Dollar is gradually regaining some strength against the Loonie. The pair has already appreciated 80 pips after the massive plunge mid-Friday. As a result, the prevailing channel down was breached to the upside.
At the time of this analysis, the US Dollar had breached the 100-hour SMA and was testing the 55-hour moving average. A successfully breakout of this line would point to the prevalence of the bearish sentiment. This scenario is likewise supported by technical indicators, although these signals are not very clear.
The aforementioned fall, however, might be short-lived due to the monthly S1 being located at 1.2420. On the other hand, a possible surge could be limited by the 200-hour SMA at 1.25.
At the time of this analysis, the US Dollar had breached the 100-hour SMA and was testing the 55-hour moving average. A successfully breakout of this line would point to the prevalence of the bearish sentiment. This scenario is likewise supported by technical indicators, although these signals are not very clear.
The aforementioned fall, however, might be short-lived due to the monthly S1 being located at 1.2420. On the other hand, a possible surge could be limited by the 200-hour SMA at 1.25.
Comment:
After testing the 55-hour SMA mid-Wednesday, bulls took over the market, thus allowing for a price increase up to the 1.2580 mark. The Greenback hindered slightly below the 200-hour SMA, but this line was eventually breached as a result of a strong hourly surge.
The US Dollar remained steady against its Canadian counterpart during the first part of Thursday. This minor consolidation points to a possible change in sentiment, especially after such a massive surge.
In case the US PPI shows solid data, the rate might still push towards to the monthly PP and the weekly R2 at 1.2642 for a brief period of time.
This move, however, should be subsequently followed by a correction southwards down to a support cluster formed by the 55-hour and 200-hour SMAs or even the 100-hour SMA at 1.2490 and 1.2456, respectively.
The US Dollar remained steady against its Canadian counterpart during the first part of Thursday. This minor consolidation points to a possible change in sentiment, especially after such a massive surge.
In case the US PPI shows solid data, the rate might still push towards to the monthly PP and the weekly R2 at 1.2642 for a brief period of time.
This move, however, should be subsequently followed by a correction southwards down to a support cluster formed by the 55-hour and 200-hour SMAs or even the 100-hour SMA at 1.2490 and 1.2456, respectively.
First of all the pair has passed the previously significant resistance of the 55-hour SMA. By the middle of Tuesday’s trading the simple moving average had moved to support a monthly level of significance near the 1.2420 mark.
Secondly, the pair had encountered the resistance line of a medium term channel down pattern near the 1.2440 level.
In regards to the near future, the pair is set to be squeezed in between the two mentioned levels. Afterwards, a break out should occur.