USD/CAD price analysis: 50 per cent pullback stalling buying interest

USD/CAD price analysis: although the medium-term bias is flipped to the upside, we look to the 50 per cent level to hold back buyers

USD/CAD price analysis                                 

Market highlights from the past week

Wednesday September 16: The Federal Reserve reiterated its commitment to getting inflation above 2 per cent to raise the average and forecast no increase in the Fed Funds rate until at least the end of 2023

Thursday September 17: US dollar short covering faded during Thursday with the US currency losing ground as underlying sentiment remained weak

Friday September 18: oil prices were protected to some extent by Saudi Arabian calls for production quotas to be respected.

Monday September 21: commodity currencies declined sharply amid fears over the global economic rebound

Tuesday September 22: commodity currencies overall moved lower as US dollar gains dominated with RBA rate-cut speculation hurting the Australian dollar

USD/CAD price analysis:

Let’s have a look at the technical viewpoint.

Monthly: previous swing high located at 1.4680 (January 2016). Sellers emerged at 1.4667 in March. Continued selling has resulted in five months of net losses with buyers returning in September

Weekly: previous swing low seen at 1.3355. What was support, now becomes resistance.

Daily: we have a 50 per cent pullback level located at 1.3352 (from 1.3716-1.2989). We posted a Doji style candle yesterday highlighting indecision at current levels. Resistance is seen at 1.3348

Intraday four-hour: trading within a bullish channel formation. Trend line resistance is seen at 1.3376

Outlook: although the medium-term bias is flipped to the upside, we look to the 50 per cent level to hold back buyers

Possible trade set-up:

Action: selling at 1.3348 (resistance)

Stop: 1.3388 (above trend line resistance)

Target: 1.3120 (swing low)

Potential return on risk to first target:  R5.7 (reward 228/risk 40)

US Dollar / Canadian dollar
Daily change
1.26904
Low: 1.26454
High: 1.27242

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