• Last Candlesticks pattern: Shooting doji
• Time of formation: 01 May 2017
• Trend bias: Sideways
• Last Candlesticks pattern: Bearish engulfing
• Time of formation: 5 May 2017
• Trend bias: Down
USD/CAD – 1.2203
As the greenback has recovered after falling to 1.2061 late last week, suggesting consolidation above this level would be seen and test of the Tenkan-Sen (now at 1.2245) cannot be ruled out, however, reckon upside would be limited to 1.2300 and renewed selling interest should emerge around 1.2340-50, bring another decline later, below 1.2080-85 would bring retest of 1.2061 but break there is needed to confirm recent downtrend has resumed and extend further weakness to psychological level at 1.2000, having said that, oversold condition should prevent sharp fall below 1.1920-25 (61.8% projection), risk from there has increased for a rebound to take place later.
On the upside, whilst initial recovery to 1.2245-50 cannot be ruled out, reckon 1.2340-50 would limit upside and bring another decline later to aforesaid downside targets. A daily close above resistance at 1.2415 would defer and risk a stronger rebound to the Kijun-Sen (now at 1.2420) but only a sustained breach above this level would abort and signal a temporary low is formed instead, bring retracement of recent decline to 1.2520-25, then towards 1.2600 but said resistance at 1.2663 should remain intact, bring retreat later.
Recommendation: Sell again at 1.2340 for 1.2100 with stop above 1.2440.
On the weekly chart, last week’s selloff formed another black candlestick, adding credence to our view that recent decline from 1.3794 top is still in progress and may extend weakness towards psychological support at 1.2000, however, reckon downside would be limited to 1.1920-25 (61.8% projection of 1.3794-1.2414 measuring from 1.2778) and reckon 1.1840-50 would hold from here, price should stay above 1.1750-60, bring rebound later this month.
On the upside, although initial recovery to 1.2240-50 and then 1.2300 cannot be ruled out, reckon upside would be limited to 1.2340-50 and bring another decline. A weekly close above previous support at 1.2414 would risk test of last week’s high at 1.2429 (this would also penetrate the Tenkan-Sen at 1.2420) but upside should be limited to 1.2500. Only a break above resistance at 1.2663 would suggest recent decline has ended instead, bring subsequent bounce to 1.2700 and later towards previous resistance at 1.2778.