Chart of the week – USD/CAD
Bearish signals sighted in USD/CAD ahead of BoC meeting
Short-term technical analysis (1 to 3 weeks)
Time-stamped: 9 Jul 2022 at 3:00pm SGT
Source: CMC Markets
- Bank of Canada will meet this Wednesday, 13 July to decide on its monetary policy outcome.
- From an integrated technical analysis perspective, the +560 pips rally seen on USD/CAD from its 8 June 2022 low of 1.2518 may have reached an exhaustion/inflection point on 5 July 2022 where the next potential trajectory for USD/CAD is likely skewed towards the downside in the short-term.
- Watch the 1.3080 key medium-term pivotal resistance for a potential drop to retest its intermediate support at 1.2840 and a break below it may see a further downside acceleration towards the next support at 1.2680/2650 (former minor swing high of 13 April 2022 & a cluster of Fibonacci retracement/extension levels) in the first step.
- However, a 4-hour close above 1.3080 invalidates the bearish scenario and triggers a bullish breakout above the upper boundary of its one-year ascending range configuration for a further up move towards the next resistance at 1.3340 (also the 50% Fibonacci retracement of prior major downtrend phase from 19 March 2020 high to 1 June 2021 low).
- Negative elements; it has formed a daily “Evening Doji Star” bearish reversal candlestick pattern (taking into account the price actions of 5/6/7 July 2022) right at the 1.3080 ascending range resistance, short-term downside momentum remains intact as the 4-hour RSI has just staged a bearish breakdown from its corresponding ascending support at the 50% level and still has not reached an extremely oversold level.
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
