Morning Market Update – USD/CAD

USD/CAD’s downtrend re-accelerated and dived to as low as 1.2332. A temporary low is formed and the initial bias is neutral thus far. At this point, we’d remain cautious on the support from 1.2314 to bring sustainable rebound. But still, a break of the 1.2314 support-turned-resistance is needed to be the first sign of trend reversal. Otherwise, outlook will remain bearish. A firm break of 1.2314 will pave the way to the next level at 1.2284.

Looking at the bigger picture, current downside acceleration is raising the chance that the whole long term fall from 1.2332 is continuing for 1.2284. Focus is now on 1.2314. As long as this level holds, we’d still favor that case that fall from 1.2332 is a correction. However, a firm break of 1.2314 will indicate that fall for 1.2284 is at least a medium term down trend and should target at 1.2254 and below.

In the longer term picture, the long term outlook is turned a bit mixed with the current downside acceleration. As noted above at 1.2332 is a key level to determine whether up trend has already completed.

The Yen remains under pressure as the market continues to fall away. The down days are characterized by strong bear candles, whilst any recovery up-days are beset with struggles to make any headway and turn in effect into consolidation days. The daily momentum indicators have all now taken on a corrective outlook, with the Stochastics falling below 80. The pair is now back into the old pivot band 1.2332 so it will be interesting to see the reaction.

The likelihood is that the 1.2332 support which has often been seen as an inflection point will now be tested. The four hourly chart shows the resistance at 1.2362 is bolstered now as a key level, with initially an area of near term overhead supply.

The USD/CAD pair settled within sideways and tight track yesterday and failed to surpass the 1.2322 barrier, which hints the price head to resume the main bearish trend that moves organized inside the main bearish channel.

Therefore, the price needs to break 1.2314 to confirm activating the negative effect of the bearish, followed by rallying towards achieving our negative targets that start at 1.2284 mainly, noting that breaching 1.2284 will push the price to test the 1.2254 level before any new attempt to decline.

Expected trading range for today is between the 1.2284 support and 1.2362 resistance.

Expected trend for today: Bearish

 
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