- Last Candlesticks pattern: Bullish engulfing
- Time of formation: 02 May 2016
- Trend bias: Up
- Last Candlesticks pattern: Hammer
- Time of formation: 19 Oct 2016
- Trend bias: Up
USD/CAD – 1.3380
The greenback found decent demand at 1.3056 and staged a much stronger-than-expected rebound, dampening our bearishness and suggesting the decline from 1.3599 has ended at 1.2969 bark in January, hence consolidation with mild upside bias is seen for further gain to 1.3450 and then towards 1.3500, however, as broad outlook remains consolidative, reckon upside would be limited to 1.3540-50 and price should falter well below resistance at 1.3599, bring further choppy trading within recent established broad range.
On the downside, whilst pullback to 1.3310-20 cannot be ruled out, reckon the lower Kumo (now at 1.3256) would limit downside and price should stay above the Kijun-Sen (now at 1.3186), bring another rise later. A daily close below the Kijun-Sen would suggest top is possibly formed, bring weakness to 1.3150-60, however, downside should be limited to 1.3100 and said support at 1.3056 should remain intact. Only a drop below 1.3056 support would revive bearishness and signal the rebound from 1.2969 has ended, then test of 1.3009 support would be seen first.
Recommendation: Stand aside for this week.
On the weekly chart, this week’s rally looks set to form a long white candlestick, suggesting the fall from 1.3599 has ended at 1.2969 earlier, hence consolidation with mild upside bias is seen for further gain to 1.3400, however, said resistance at 1.3599 should hold from here, bring further consolidation. Only a break of said resistance at 1.3599 would shift risk back to upside and extend the erratic rise from 1.2461 (2016 low) to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.
On the downside, although pullback to 1.3300-10 cannot be ruled out, reckon downside would be limited to 1.3250 and bring another rebound later. A drop below the Kijun-Sen (now at 1.3211) would risk weakness to 1.3150 and possibly test of this week’s low at 1.3083 but break of indicated support at 1.3056 support is needed to revive bearishness and signal the rebound from 1.2969 has ended, then test of 1.3009 support would follow, break there would signal the fall from 1.3599 has resumed for retest of 1.2969, a break of this support would extend such decline to 1.2900 but reckon support at 1.2822 would limit downside and key support at 1.2763 should hold on first testing. Looking ahead, only a drop below 1.2763 would signal the rebound from 1.2461 has ended and bring further fall to 1.2654 support first.