USD/CAD price analysis: the bias flips to the upside
USD/CAD medium-term outlook is bullish but there is scope for a further correction to buy into
Market highlights from the last week
Thursday 4th June: The dollar overall continued to decline as confidence in the global outlook undermined defensive US demand with the currency index at 11-week lows
Friday 5th June: Commodity-currency sentiment held firm, but gains were hampered by US currency gains
Monday 8th June: Commodity currencies made further net gains on optimism over a global recovery, but retreated from their best levels with AUD/USD selling above 0.7000
Tuesday 9th June: Gains in oil prices faded in choppy trading after a sharp API inventory build
Wednesday 10th June: The Federal Reserve made no changes to interest rates, bond-buying will continue while median projections were for zero interest rates until the end of 2022. Commodity currencies also surrendered initial gains with sharp losses as volatility increased
USD/CAD Price Analysis
Let us have a look at the technical viewpoint:
Monthly: Previous swing high located at 1.4680 (January 2016). Sellers emerged at 1.4667 in March with the subsequent selloff resulting in half the initial monthly gains being overturned. April and May saw rallies being sold into
Weekly: The 78.6% Fibonacci of 1.3323 held firm (from 1.2948-1.4667). This is close to the previous swing high of 1.3330 (what was resistance, becomes support)
Daily: Buying pressure form 1.3315 resulted in all the initial daily losses being bought into. We have posted a Doji style candle on the daily chart. A daily close above 1.3488 will form a bullish Morning Doji Star pattern (3 candles) and possibly highlight the end of the bearish trend.
Intraday 4-hour: Previous swing high located at 1.3488. Any corrective moves lower from this important resistance area are likely to form a bullish reverse Head and Shoulders pattern
Outlook: The medium-term outlook is bullish but there is scope for a further correction to buy into
Possible trade setup:
Action: Buying at 1.3360
Stop: 1.3300
Target: 1.3590
Potential return on risk to first target: R3.8 (reward 230 / risk 60)
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FURTHER READING: USD/CAD Price Analysis: We look for dips to be bought
