Last week we recommended traders holding Long on expected reversal from the 38.2 Fibonacci level @ 1.3050. The long trade was in place, price has made two attempts to bounce up but has been effectively resisted at 1.3140 which will need to be broken for USDCAD to gain further. Last Friday, the price fell below the 38.2 level and with that all cluster of 4 Hour MAs and interim support were also broken. The break below is not strong, but the basis on which this long recommendation was given is no longer valid.
We recommend to close the long trade at current levels (1.3035) booking a small loss of -35 pips.
Aggressive traders can consider short USDCAD if price tests 1.3140 level this week (stop-loss above 1.3170). Further dovish statements from FED could break USDCAD to its 50 Fib level or even reach its major supply zone at 1.2800
USDCAD Technical Analysis : 08-12 July 2019
In our previous week’s USDCAD technical analysis, we recommended long USDCAD @ 1.3070 (after a H1 reversal bar) with stop-loss below 1.2970 for Targets 1.3400.
Traders had two opportunities to enter the long recommendation on 4th July. With positive NFP data strengthening the dollar, USDCAD had a sharp spike to 1.3130 on Friday but the pair has given up the gain at market open this week.
There is no change in our analysis of the USDCAD price action and the long recommendation remains valid with the stop-loss at 1.2970.
On 4th July 2019, due to US holiday the price briefly slipped below the 38.2 Fibonacci level of the move from the low of 2017 to high of 2018. This was stop grabber move which is known to collect all the weaker stops above the resistance and below the support – such moves are more commonly seen in volatile markets. USDCAD printed a low of 1.3037 and reversed above 1.3052 level again. No real damage has been done to the major Fib level as of this writing.
Analysis of the 4 Hour chart still supports the long trade with a minimum target of 1.3200 (20 day MA + 100 4H MA) which likely to pose the next resistance. Traders can choose to book partial profits at this level and move the stoploss to 1.3090.
The trade’s recommended initial stop-loss is placed well below the supports at 1.3030, 1.3000 and 1.2980, which are expected to give USDCAD long trade a chance to rebound to higher levels on FED rate cut talks.