USD/CAD Price Analysis Ending Wedge highlights limited selling
We have support seen at 1.3868, a 261.8% extension at 1.3888 and an Ending Wedge, there is ample scope for a corrective rally.
Market highlights from the last week
Monday 4 May: There was further choppy Canadian dollar trading during Monday. After initial losses with USD/CAD peaking at 1.4150, there was a sharp reversal with USD/CAD retreating to 1.4050 as oil prices rallied before stabilising just below 1.4100
Tuesday 5 May: Oil prices continued to post gains amid hopes that global demand was stabilising
Wednesday 6 May: US ADP data reported a private-sector employment decline of over 20.0mn for April
Thursday 7 May: The dollar edged lower on a dip in defensive demand, although selling pressure was limited as talk of negative US interest rates faded slightly
Friday 8 May: Canadian jobs data for April recorded an employment decline of 1.99 million after a 1.01 million decline the previous month, although this was below expectations of 4.0 million
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. We closed April with mild net losses and all trading inside the March range, an indecisive Inside Month
Weekly: The 423.6% extension level is located at 1.4576. This is a common Fibonacci extension as far commodities and commodity currencies are concerned (with regards to an Elliott Wave formation). Posted Inside Bars for the last 6 weeks
Daily: Price action looks to be forming a bearish triangle formation that has an eventual bias to break to the downside. Support is located at 1.3868
Intraday 1-hour: We have a 261.8% extension level located at 1.3888. Price action looks to be forming a bullish Ending Wedge pattern. The downside looks limited
Outlook: Although the long-term bias still looks negative for USD/CAD, with support seen at 1.3868, a 261.8% extension at 1.3888 and an Ending Wedge, there is ample scope for a corrective rally before the next selloff. Resistance is seen at 1.4015
Possible trade setup
Action: Buying at 1.3888
Potential return on risk to first target: R3.1 (reward 127 / risk 40)
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