Daily Timeframe: Last week’s action saw the market absolutely obliterate a daily supply area at 1.2265-1.2162. This in turn saw the market continue north towards another daily supply area coming in at 1.2504-1.2385. For the USD/CAD pair to continue rallying this week, this daily supply area will need to be consumed. In the event that there are willing sellers located here, prices may be forced back down to retest the weekly swap level mentioned above at 1.2260.
4hr Timeframe: Last week’s began to simmer down going into Thursday and Friday’s sessions, as price attacked 1.2400. The rather messy action around 1.2400 likely saw the majority of sellers stopped out, and most of the breakout buyers trapped.
So, with the indicating that direction is likely north, and the currently showing price dancing within supply (see above for levels) at the moment, where does this leave the 4hr timeframe?
The choppy price action around 1.2400 seen late last week may be a vital clue as to where price may trade today and possibly into tomorrow. In our opinion, price is showing that small pockets of demand have likely been consumed, notice how when price saw a small rally, it spiked lower to fill unfilled buy orders, thus potentially clearing the path south (depicted with a small red ). Therefore, assuming there are indeed sellers located within the daily supply area mentioned above at 1.2504-1.2385, this may be enough to push the market south towards the 1.2300 handle. But, that’s not all. Lurking just below here is the weekly swap level that was just recently broken at 1.2260. So, between 1.2300 and 1.2260 we now have a strong base to watch for confirmed buying opportunities (green area). In addition to this, we have added support from the line which was recently broken (now acting support), this forming a highly confluent area, which a lot of traders are likely going to be watching.
Current buy/sell levels:
• Buy orders: Will be watching the 1.2300/1.2260 zone carefully this week for confirmed buy trades (Predicative stop-loss orders seen at: 1.2249).
• Sell orders: Flat (Predicative stop-loss orders seen at: N/A).