1.28 Could Be The Line In The Sand For CAD’s Next Decisive Move
As we head towards the long weekend, price action has proven to be fickle due to end of month/quarter flows. But that doesn’t mean opportunities won’t be around the corner.
Throughout February to mid-March, the rally on the daily USD/CAD chart exhibited distinct swing lows and orderly retracements. Yet after reaching the 1.3124 high and producing a narrow-ranged spinning top, bulls encountered a rude awakening.
USDCAD 1 Day Chart
Range expansion presented itself with the worst session of the year, closed beneath the December 2017 high and confirmed a bearish RSI pergence. Whilst price action is yet to take out the 1.2802 low (call it 1.2800), it appears bullish momentum is still licking its wounds and upside remains capped by the 20-day average.
We’re keeping an eye for a break below the 1.2800 low as it would confirm two bearish patterns; a head and shoulders top on the daily chart (above) and a dark cloud cover on the weekly chart (below).
USDCAD 1 Week Chart
We can see on the weekly chart how the dark cloud cover respected a 61.8% Fibonacci retracement level and the upper bullish channel. Whilst this is a wide channel which allows USDCAD to potentially track higher as the year progresses, it still allows for a sizable move lower if we see 1.2800 broken with conviction. Until then, we’ll patiently sit on our hands and wait for the market to make its next move.