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USD/CAD Candlesticks and Ichimoku Analysis

    •    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 – 1.3281


Although the greenback rose briefly to 1.3415 earlier this week, as renewed selling interest emerged there and the pair has retreated sharply, suggesting the rebound from 1.3264 has ended there and downside bias is seen for the fall from 1.3535 to extend further weakness to 1.3230, however, reckon downside would be limited to 1.3200-10. Looking ahead, a daily close below there would retain bearishness for the aforesaid decline to extend weakness to 1.3160-65 and possibly towards 1.3100 but price should stay well above support at 1.3056, bring rebound later. Only a daily close below this level would retain bearishness and signal the rebound from 1.2969 has indeed ended, bring further fall to 1.3000 first, however, said support at 1.2969 should remain intact.

On the upside, whilst recovery to the Tenkan-Sen (now at 1.3340) cannot be ruled out, reckon upside would be limited to 1.3380-85 and bring another decline later. Above 1.3380-85 would risk test of said resistance at 1.3415 but only break there would revive bullishness and signal low has been formed, bring another rise later. A daily close above 1.3415 resistance would suggest the pullback from 1.3535 top has ended and bring further gain to 1.3490-00 but said resistance at 1.3535 would hold on first testing. Looking ahead, only a break of this level would retain bullishness and extend early erratic upmove from 1.2461 low to 1.3599, then 1.3660-70 but still reckon upside would be limited to 1.3700 and risk from there is seen for a retreat later. 

Recommendation: Sell at 1.3375 for 1.3175 with stop below 1.3435.

On the weekly chart, as the greenback met resistance at 1.3415 and has retreated, retaining our view that further consolidation below resistance at 1.3535 would be seen and test of the Tenkan-Sen (now at 1.3252) is likely, however, break of previous resistance at 1.3210 is needed to suggest a temporary top is formed, bring further fall to 1.3150-60, break there would add credence to this view and signal the rebound from 1.2969 has ended, bring subsequent decline towards 1.3083, however, indicated support at 1.3056 should hold from here, risk from there has increased for a rebound later.

On the upside, expect recovery to be limited to 1.3340-50 and bring another decline. Above said resistance at 1.3415 would bring test of 1.3495 resistance but break of latter level is needed to signal the pullback from 1.3535 has ended, bring retest of this level first, break there would extend recent rise from 1.2969 to indicated resistance at 1.3599, however, a break of this resistance is needed to retain bullishness and signal upmove from 1.2461 (2016 low) has resumed for headway to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.

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