USDCAD - Weekly Strategy Update - April 18 2020
Weekly Technical Price Movement Recap:
Since the news of the Covid 19 outbreak, USD there has been extreme volatility and swings in the weekly price of the USD relative to the CAD dollar. We saw price jump from 1.35~ to 1.40~, a jump of approx 1450 pips in movement. It seems the price jump has created a "top" and has retraced and is sitting at 50% of the last upswing. This is an interesting level because price has the probability of turning at this level or as it approaches the fib 0.618 level. Currently there is no indication of any reversal or continuation and rather the week has ended with an indecision with highs and low wicks extending far off the body of the candle.
We have not seen the traditional fight amongst the institutions at the top of the high and so no safe entry was possible without significant risk of loss.
Recent Daily Significant Levels/Zones of Importance:
Resistance - 1.455 - 1.466 - This area became a wall where institutions eventually turned the market to the downside.
Support - 1.39428 - 1.3337 - This area was a previous area of consolidation/accumulation and is also the 50% and 0.618 fib level.
Support - 1.36711 - This is an area which was previous resistance and we are looking for evidence that buy orders are sitting here.
Support - 1.35279 - This area was a previous double top resistance level that we are looking for price action evidence of buy orders.
Recent Pattern / Trend Formations on the Daily: Short
From the strong upswing from March 20th, we are seeing the confirmation of the continued downtrend channel of lower highs and lower lows. Ideally we would be looking for short positions, but this may change depending on the price activity at lower timeframes.
Recent Pattern / Trend Formations on the 4 Hour: Long
While price has been downtrending, it has been struggling to do so indicating that there are buyers creating pressure in the market to turn the market. The last swing to the downside took a significantly longer time to reach a new low, indicating that selling pressure has waned and we are starting to see strong buying candles even at the top the downtrend, which is traditionally not present in a strong down trending market at the top. Rather this looks more reminiscent of a breakout and a pull back to around 50% of the previous break.
Price Activity Requirements for Short Positions:
Entry: 1.41322
Stop: 1.41813
Target One: 1.39166
Strategy Summary:
Price would need to retrace to 1.41322 for a potential short position depending on price activity at this level. The play is that we are expecting other short orders to drive price away from this level. If there is lack of rejection at this level, it might signal a buying opportunity as the next resistance level is at 1.42584.
Price Activity Requirements for Long Positions:
Entry: 1.39197
Stop: 1.38540
Target One: 1.41813
Strategy Summary:
Price is expected to reach 1.39197 and the price activity at this level should display supportive characteristics such as institutions puling the price a number of pips below with a fast retrace with at least 80%. We are also looking for price activity rejection patterns of long buying wicks. We will wait for the price to settle and upon a few higher highs we will enter the market expecting a bullish move. If price fails to bounce at this level, the next entry would be at 1.36704.
Since the news of the Covid 19 outbreak, USD there has been extreme volatility and swings in the weekly price of the USD relative to the CAD dollar. We saw price jump from 1.35~ to 1.40~, a jump of approx 1450 pips in movement. It seems the price jump has created a "top" and has retraced and is sitting at 50% of the last upswing. This is an interesting level because price has the probability of turning at this level or as it approaches the fib 0.618 level. Currently there is no indication of any reversal or continuation and rather the week has ended with an indecision with highs and low wicks extending far off the body of the candle.
We have not seen the traditional fight amongst the institutions at the top of the high and so no safe entry was possible without significant risk of loss.
Recent Daily Significant Levels/Zones of Importance:
Resistance - 1.455 - 1.466 - This area became a wall where institutions eventually turned the market to the downside.
Support - 1.39428 - 1.3337 - This area was a previous area of consolidation/accumulation and is also the 50% and 0.618 fib level.
Support - 1.36711 - This is an area which was previous resistance and we are looking for evidence that buy orders are sitting here.
Support - 1.35279 - This area was a previous double top resistance level that we are looking for price action evidence of buy orders.
Recent Pattern / Trend Formations on the Daily: Short
From the strong upswing from March 20th, we are seeing the confirmation of the continued downtrend channel of lower highs and lower lows. Ideally we would be looking for short positions, but this may change depending on the price activity at lower timeframes.
Recent Pattern / Trend Formations on the 4 Hour: Long
While price has been downtrending, it has been struggling to do so indicating that there are buyers creating pressure in the market to turn the market. The last swing to the downside took a significantly longer time to reach a new low, indicating that selling pressure has waned and we are starting to see strong buying candles even at the top the downtrend, which is traditionally not present in a strong down trending market at the top. Rather this looks more reminiscent of a breakout and a pull back to around 50% of the previous break.
Price Activity Requirements for Short Positions:
Entry: 1.41322
Stop: 1.41813
Target One: 1.39166
Strategy Summary:
Price would need to retrace to 1.41322 for a potential short position depending on price activity at this level. The play is that we are expecting other short orders to drive price away from this level. If there is lack of rejection at this level, it might signal a buying opportunity as the next resistance level is at 1.42584.
Price Activity Requirements for Long Positions:
Entry: 1.39197
Stop: 1.38540
Target One: 1.41813
Strategy Summary:
Price is expected to reach 1.39197 and the price activity at this level should display supportive characteristics such as institutions puling the price a number of pips below with a fast retrace with at least 80%. We are also looking for price activity rejection patterns of long buying wicks. We will wait for the price to settle and upon a few higher highs we will enter the market expecting a bullish move. If price fails to bounce at this level, the next entry would be at 1.36704.