Weekly closing price: 1.3333
Weekly view: Across the board, we saw the US dollar appreciate last week, consequently bringing the USD/CAD up to within shouting distance of a drawn from 1.3381. This barrier has provided the pair significant going back to the 1990s, thus, the buyers will likely struggle to advance beyond here this week.
Daily view: Thanks to the recent bout of buying, the daily candles are also seen trading deep within a penciled in at 1.3405-1.3259. In addition to this, price is currently getting to grips with, what we like to call, a daily convergence point. This area is made up of: a 38.2% Fib at 1.3315 (green line), the weekly at 1.3381, a channel resistance taken from the high 1.3241 and an completion point around the 1.3376ish range.
H4 view: As we explained in Friday’s report, our team placed a pending sell order at 1.3315 and set a stop-loss order above the current daily supply at 1.3407. This was simply due to the truckload of daily/weekly confluence. Although the market closed the week above our entry, meaning we ended in drawdown, our team is confident that the H4 supply at 1.3405-1.3353 (located within the extremes of the above said daily supply) will force prices to trade lower this week.
Direction for the week: According to higher-timeframe structure, the pair is now in overbought territory. As a result, price will likely decline in value this week, possibly bringing the candles back down to daily support coming in at 1.3029.
Direction for today: The H4 candles will likely look to attack the 1.33 handle this morning. Ideally, we’re looking for a decisive push beyond this number today, as this will likely seal the deal for lower prices down to at least the 1.32 handle, which of course, would be fantastic for our current short position in this market!
Our suggestions: Wait for a close below 1.33 to confirm downside. Following this, a retest to the underside of this number along with a reasonably sized H4 candle would, in our view, make for a beautiful shorting opportunity down to 1.32. Should this come to fruition, we will also likely look to pyramid our current position.
From a fundamental standpoint, nevertheless, we not only have Fed officials speaking at 1pm and 6pm today, we also have the BoC Gov . Poloz taking the spotlight at 7.30pm GMT . As such, trade with caution during these times guys!
Levels to watch/live orders:
• Buys: Flat (Stop loss: N/A).
• Sells: 1.3315 (live, Stop loss: 1.3407). Watch for a close below the 1.33 handle and then look to trade any retest seen thereafter (H4 close required prior to pulling the trigger).