Forex Technical Update

Previous: USD/CAD Remains Range-bound Below Parity; Develops Head and Shoulder (9/16)

USD/CAD

USD/CAD

The 4H USD/CAD chart shows the loonie losing strength to the US dollar. This is following up with a head and shoulder developed last week as the pair fell from parity. However, the surge in the Monday US session invalidated this topping formation. The price action also broke above the projected bearish channel resistance signaling a retest of the parit, 1.0 level, which is psychological and actual resistance. There are plenty of short-term triggers for CAD ahead, with Bank of Canada Deputy Gov. Timothy Lane speaking Monday and Gov. Mark Carney on Tuesday. The economic calendar shows Aug CPI coming Wednesday and July retail sales Thursday. These risk events set the battle between bulls and bears in the USD/CAD near 1.0. This outlook is still a little premature as the RSI just needs to push above 60, although we can argue that the 4H price action is convincingly bullish. Above parity, we open up the 1.03 and if parity becomes support, we have established a bottom for the rest of this year to build strength towards 1.08-1.0850.

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Fan Yang CMT
Chief Technical Strategist

FXTimes