USDCAD , H4
USDCAD has fallen to 2-week lows of 1.3085, breaking the day’s S1 and S2 level. The Loonie appears to be benefiting from hopes for a NAFTA agreement, as negotiations appear to be ramping up again. Canada’s foreign affairs minister Freeland is meeting Mexican officials in Mexico City today, while the Mexican economy minister will be in Washington on Thursday to discuss trade.
USDCAD has extended today below the 20-day SMA towards 50-day SMA after breaking the immediate support at 1.3100, which is at the latest 2 consecutive down daily fractals. This triggered into our attention the next strong Support at the 50.0 Fibonacci retracement level, around 1.3060-1.3065 area, since May’s rally, which coincides with July’s bottom and the low edge of the Bollinger Band pattern in the daily chart. This area behaved as a Resistance level in May prior being converted to 2-month Support level for the pair.
Therefore a breakout below Support area along with the fact that the pair moves within the lower Bollinger Band area for the 4th day in a row, would suggest the retest of the next Support area at 1.2985-1.3015. The latest Support area is set between 61.8% Fib. level and the 61.8 Fibonacci extension from the rebound seen on July 9. Further losses would open the doors towards 1.2900, and the confluence of 200-day SMA and the FE 127.2, at 1.2820.
Another sign for the bearish outlook of the USDCAD could be the confirmation of the head and shoulders formation in the medium term chart. A closing today below pattern’s trendline at 1.3060 will confirm the particular bearish candlesticks formation.
Technically- wise, in the 4-hour charts, momentum indicators comply with pair’s negative picture. RSI moves towards the oversold barrier while it is below neutral zone since July 20. MACD oscillator rises strongly below its trigger line within the negative area.
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Andria Pichidi
Market Analyst
HotForex
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