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
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)
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