HomeContributorsTechnical AnalysisLoonie Surges after BoC’s Quarter point Rate Increase and Signal of Further...

Loonie Surges after BoC’s Quarter point Rate Increase and Signal of Further Gradual Hikes

The pair fell sharply after Bank of Canada raised interest rates in expected action on Wednesday

The BoC hiked by 25 bp from 1.25% to 1.50% in line with forecasts on fourth rate increase sine the central bank started raising interest rates one year ago.

The loonie surged on remarks that the central bank is ready for further gradual rate hikes but warned that rising trade tensions would impact investments more than it was initially estimated.

Fresh fall brought the price to the lower boundary of three-day congestion at 1.3060 zone, which also marks 50% retracement of 1.2729/1.3386 rally.

Daily MA’s (10; 20; 30) are turning in negative setup, with bearish momentum building up and supporting further downside.

Firm break below 1.3060 handle is needed to signal continuation of near-term downtrend from 1.3386 double-top (22/27 June) towards next targets at 1.3000 (psychological support, reinforced by rising 30SMA) and 1.2980 (Fibo 61.8% of 1.2729/1.3386), with extension towards 1.2920 (daily cloud top, reinforced by rising 100SMA) seen on stronger bearish acceleration.

Broken daily Kijun-sen (1.3121) is expected to cap while stronger bullish signal could be expected on break and close above daily Tenkan-sen (1.3166) which capped today’s action.

Res: 1.3121; 1.3166; 1.3200; 1.3225
Sup: 1.3060; 1.3000; 1.2980; 1.2920

Windsor Brokers Ltd
Windsor Brokers Ltdhttp://www.windsorbrokers.com/
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