A closer look at USD/CAD price action shows it’s trading within the confines of an
embedded near-term descending channel formation extending off the December highs
with the lower parallel further highlighting support at the 1.2883. Initial resistance
now 1.3050 backed by the October low-day close at 1.3086 – both levels of interest for
possible topside exhaustion if reached. Bearish invalidation now is at 1.3182. A break or
close lower from here exposes subsequent support objective at 1.2883, – look for a larger
reaction there to 1.2657.
The USD/CAD sell-off is testing the first major support target and while the broader
outlook remains weighted to the downside, the immediate decline may be vulnerable
while above the 1.2957 confluence zone. From a trading standpoint, look for exhaustion
ahead of recoveries to be capped by the 1.3050.
Main scenario: short positions will become relevant during the correction, below the
level of 1.3182 with the targets at 1.2883 – 1.2657.
Because we understand risks to the thesis, we provided an alternative idea:
Alternative scenario: the breakout and the consolidation of the price above the level
of 1.3182 will let the pair grow to the levels of 1.3398 – 1.3563
- The Macro Strategist Team
embedded near-term descending channel formation extending off the December highs
with the lower parallel further highlighting support at the 1.2883. Initial resistance
now 1.3050 backed by the October low-day close at 1.3086 – both levels of interest for
possible topside exhaustion if reached. Bearish invalidation now is at 1.3182. A break or
close lower from here exposes subsequent support objective at 1.2883, – look for a larger
reaction there to 1.2657.
The USD/CAD sell-off is testing the first major support target and while the broader
outlook remains weighted to the downside, the immediate decline may be vulnerable
while above the 1.2957 confluence zone. From a trading standpoint, look for exhaustion
ahead of recoveries to be capped by the 1.3050.
Main scenario: short positions will become relevant during the correction, below the
level of 1.3182 with the targets at 1.2883 – 1.2657.
Because we understand risks to the thesis, we provided an alternative idea:
Alternative scenario: the breakout and the consolidation of the price above the level
of 1.3182 will let the pair grow to the levels of 1.3398 – 1.3563
- The Macro Strategist Team