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USDCAD Hit Target 1

Market Analysis
Chart_16-07-08_11-05-46

USDCAD, 240 min

I wrote on USDCAD yesterday saying that it had created a daily shooting star in Wednesday’s trading and said that I expected the pair to break below the support. The idea was to look for sell signals after rallies if price breaks below 1.2940.My targets were: 1.2905 (T1) and 1.2860 (T2). The pair broke below the support and provided a sell signal near 1.2940 as it rallied back to the level. This lead the market lower well beyond my target one and all the way to 1.2876 before it rallied massively on the back of EIA oil reserve report causing the price of WTI crude to drop by over three dollars from $48 to $44.90. The report rekindled bearish supply-demand imbalance concerns. Crude is now trading just below the $45.60 – $45.80 area that used to support price and is worth keeping an eye on. Oil looks technically bearish with next minor support in crude is at $44.76 while the next daily support area can be found at $42.50 – $43.00. This should support USDCAD and provide further push higher in the pair.

Even though the USDCAD is trading now near the upper daily Bollinger Bands the two higher highs in the daily chart from July 4th and yesterday (together with price of oil being bearish) are indicating the price has upside momentum and could mean that the pair pushes higher towards the June 27th highs at 1.3120. The nearest minor support can be found around 1.3000 (next at 1.2985) while nearest minor resistance levels in USDCAD is at 1.3020 while 1.3395 – 1.3108  is a more significant resistance area. July 6th high at 1.3056 is another level to pay attention to. Today’s NFP announcement could bring volatility and should the number deviate strongly from expectations then supports and resistances are more likely to be broken with higher volatility.

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Janne Muta

Chief Market Analyst

HotForex

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