USD/CAD Candlesticks and Ichimoku Analysis

The greenback's retreat from 1.3066 turned out to be stronger than our expectation and once indicated support at 1.2545/50 (previous position of Tenkan-Sen) was penetrated, usd dropped quickly to as low as 1.2182 in latter part of last week. The three consecutive black candles on the weekly chart suggest further consolidation below 1.3066 would be seen and correction towards 1.2000 is likely, however, only a daily close below 1.1700/61 (current level of Kijun-Sen and previous chart support) would signal a temporary top has been formed there and then retracement of medium term uptrend to 1.1465 would follow.

On the upside, renewed selling interest is likely to emerge around 1.2600 and expect 1.2840/50 to remain intact. Only break of 1.3066 would revive our previous bullish view for uptrend to resume to 1.3300, then 1.3445/50, being 50% projection target of entire rally from 0.9059 to 1.3019 measured from 1.1465. However, further sharp move beyond this level is unlikely as the 61.8% fibo retracement level of the long-term fall from 1.6194 (2002) is located at 1.3468 and this level should cap the pair's upside.

On the daily chart, although we have seen a ‘hammer' plus a ‘doji' star on 19th and 20th of March, the subsequent black candle failed to bring confirmation of these bullish pattern, suggesting the decline from 1.3066 is still in progress for weakness to 1.2100, then 1.2000, however, loss of near term downward momentum should prevent sharp fall below 1.1761 support and U.S. dollar may stage a strong rebound in early March.

On the upside, although recovery to 1.2430/40 cannot be ruled out, renewed selling interest shall appear around 1.2570/75 (current level of Tenkan-Sen) and expect 1.2628 (current level of Kijun-Sen) to remain intact. Above 1.2627/35 (previous support turned resistance) would indicate fall from 1.3066 has ended and bring rebound to 1.2750/60, then 1.2840/50.