Chart of the week – USD/CAD
Bearish reversal sighted in USD/CAD
Short-term technical analysis (1 to 3 weeks)Time stamped: 29 May 2022 at 12:30pm SGT (click to enlarge chart)
Source: CMC Markets
- Since its 12 May 2022 high of 1.3077, USD/CAD has staged a decline of 359 pips to print low of 1.2718 on 28 May 2022 in the backdrop of the upcoming Bank of Canada’s (Boc) monetary policy decision on Wednesday, 1 June 2022. Consensus is calling for a third consecutive interest rate hike of 50bps.
- Bearish bias in any bounces below 1.2915 key medium-term pivotal resistance for a further potential decline towards the next supports at 1.2650 and 1.2570. However, a clearance with a 4-hour close above 1.2915 negates the bearish tone for a squeeze up to retest the major range resistance zone of 1.3020/3075.
- Bearish elements; the price actions of USD/CAD have shaped a bearish breakdown from a short-term bearish reversal “Head & Shoulders” configuration on 26 May 2022 where its former neckline support now turns into a pull-back resistance at 1.2790, the occurrence of such bearish breakdown has materialised after a push up and challenge on its major range resistance of 1.3020 (see weekly chart), short-term momentum remains negative as depicted by the 4-hour RSI oscillator as it has not shaped a bullish divergence signal at its oversold region.
- The recent weakness seen in USD/CAD is in line with broad based USD weakness seen in the past two weeks where the US Dollar Index has failed to have a clear bullish breakout above a key resistance of 103.65 in place in since January 2017. Price actions have breached above 103.65 on 10 May 2022 but retreated below it thereafter and looks set to have a monthly close below 103.65 as we head into the last two trading days of May.
Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.