On the daily chart, we can see that the
USDCAD
has been diverging with the MACD trading into the key 1.3862 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the price sold off and it even broke below the bottom trendline. This is a bad omen for the buyers as it opened the door for a bigger drop into the major trendline around the 1.36 handle. If the price gets there, we can expect the buyers to step in more aggressively as they will have a much better risk to reward setup.
On the 4 hour chart, we can see more clearly the breakout of the trendline yesterday with the price now consolidating around the support zone. The sellers are likely to keep piling in as long as the price stays below the broken trendline and target the 1.36 handle. The buyers, on the other hand, will want to see the price rallying back above the broken trendline to leave behind a fakeout and start targeting a new high.
On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off shorting from the downward trendline where they will find the confluence with the broken trendline and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for new highs.
Upcoming Events
Today, we conclude the week with the US NFP report, the Canadian Labour Market data and the ISM Services PMI.
USDCAD
has been diverging with the MACD trading into the key 1.3862 resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the price sold off and it even broke below the bottom trendline. This is a bad omen for the buyers as it opened the door for a bigger drop into the major trendline around the 1.36 handle. If the price gets there, we can expect the buyers to step in more aggressively as they will have a much better risk to reward setup. On the 4 hour chart, we can see more clearly the breakout of the trendline yesterday with the price now consolidating around the support zone. The sellers are likely to keep piling in as long as the price stays below the broken trendline and target the 1.36 handle. The buyers, on the other hand, will want to see the price rallying back above the broken trendline to leave behind a fakeout and start targeting a new high.
On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off shorting from the downward trendline where they will find the confluence with the broken trendline and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for new highs.
Upcoming Events
Today, we conclude the week with the US NFP report, the Canadian Labour Market data and the ISM Services PMI.