Remain bearish on the USD/CAD

FX:USDCAD   美元/加元
Weekly gain/loss: -0.40%
Weekly closing price: 1.2703

Upside remains capped on the weekly timeframe at 1.2778, despite higher oil prices. This weekly resistance level shares a strong history that dates back to early 2004, so it is not one to ignore! In the event that the market continues to dip south from here this week, traders’ crosshairs will likely be fixed on the weekly demand at 1.2432-1.2558. Boasting a strong base, this demand area communicates strength and, therefore, will likely hold back sellers should the area come into play.

During the course of Wednesday’s sessions, the USD/CAD engulfed the daily trendline support extended from the low 1.2061 and, according to our analysis, opened up downside to the daily support level sitting at 1.2598. The pair is likely to find some support here if it comes into play with it having been a strong barrier of resistance over the past couple of months, as well as sharing its space with a 61.8% daily Fib support at 1.2618.

A quick recap of Friday’s trade on the H4 timeframe shows price extended to a high of 1.2747 in early trading, but failed to sustain gains beyond this point, consequently dropping back to revisit the 1.27 handle into the closing bell.

For those who follow our reports on a regular basis you may recall that we were short this market from 1.2764. We liquidated the majority of our position once price came into contact with 1.27 on Wednesday and moved the stop-loss order down to 1.2735. Unfortunately, we were taken out of this position on Friday.

Suggestions: Although our sell has been liquidated there is still a clear bearish vibe present, as weekly price is seen trading from resistance at 1.2778 and daily action shows room to push as far south as support penciled in at 1.2598. This is primarily why we were holding a portion of our position in the market.

Suggestions: Ultimately, we’re looking for H4 price to break back below 1.27 today. A decisive H4 close below 1.27, followed up with a retest and a H4 bearish candle (full or near-full bodied) would be enough to warrant a short down to 1.26. Remember, 1.26 shares its space with daily support mentioned above at 1.2598, so it makes for an ideal take-profit zone.

Data points to consider: US new home sales at 3pm GMT .

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Watch for H4 price to engulf 1.27 and then look to trade any retest seen thereafter (waiting for a reasonably sized H4 bearish candle to form following the retest – preferably a full or near-full-bodied candle – is advised, stop loss: ideally beyond the candle’s wick).

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