Forex Technical Update
- The USD/CAD failed to even test parity last week before the market started trading sideways again below the 1.0 level.
- We start this week's trading falling back down to the 61.8% retracement level near 0.9840, testing it for a second time.
- The 1H chart sees the USD/CAD in a second swing down, which can be the C in an ABC correction.
- If the market closes below the 61.8% retracement level, we are looking at the 0.98, 78.6% retracement level to complete this ABC correction.
- The market is not bearish until we break below the 0.97745 low, from which an upside break to a triangle started.
- The bullish scenario is also limited, until we see a clean break above parity.
- If instead of breaking below 0.9835, the market rallies and consolidates in a triangle, we can anticipate some further sideways action to complete an ABCDE structure, especially if you start seeing smaller candlesticks (reflecting narrowing volatility and suggesting a triangle creation).
- As we look at the Daily chart, we see that although we broke above some short-term triangle last Thursday, we are still consolidation in the larger perspective under the parity level, a break above which forms a large double bottom.
Fan Yang CMT
Chief Technical Strategist