USD/CAD: Stalking Second Bearish Swing
- Daily: The USD/CAD was testing the gap last week, and I was anticipating topping action near 1.0570, which was the declining channel resistance. (Refer to Weekly Technical Update 5.14.2010).
- Candlestick action so far today is showing reversal readiness, especially with a long tail that came from testing the gap that started last week.
- Here we see that a swing projection can target the parity level.
- The shorter time-frames show some more near-term support levels.
- 4H and 1H: The 4H time-frame shows the pair in a bullish mode, with the RSI staying above 40. This suggests that we should anticipate a limited move downwards in the short-term.
- For example if we look at the 1H time-frame, we see that the market created a double top and broke below. If it can continue below the 61.8% retracement level at 1.0230, it is like to continue downwards towards parity. Notice this is also the pattern breakout projection, which the market is approaching. The RSI in the 1H would break below 40.
- What we can see in the daily chart however is that the 1.19/1.20 area is an important support, so a break below these levels could be further confirmation of a return to parity.
- For this scenario, RSI breaking below 40 in the 4H time-frame would provide some confirmation.
Fan Yang Currency Analyst Commodity Trading Advisor