Forex Technical Update
The 1H USD/CAD chart shows a double bottom as the market finds support from the 0.9890 area. This is occurring just ahead of Canada's employment data to come out at 7AM EST, and the US Non-Farm Payroll data that comes out 8:30AM EST. The fact it is reverting back to the 200 hour simple moving average reflects the market is indecisive, waiting for the risk events to pass before pushing for direction.
If after the risk events the USD/CAD continues higher, let's see if real bullish momentum can gather. For that the 1H RSI should break back above 60, and tag 70. Price should rise back above parity. This would also break above a declining trendline and offer an early sign of bullish reversal in the medium term.
As we have noted in previous updates, a very important pivot resides at 1.0044, and a break above 1.0050 would be needed to open up the bullish scenario in the medium term for the upcoming weeks. A failure to break above 1.0044 maintains a bearish outlook on the USD/CAD and looks for at least another bearish swing below the current 2012 low at 0.9840, toward 0.98, and then the 0.97 handle (with a common pivot at 0.9715).
As I get ready to post this update, Canadian Change data came out -2.8K vs. the forecast of 14.2K, after a previous showing of 2.3K. The unemployment rate retreated to 7.4% after forecast of a no change of 7.6%. The initial reaction is a pause against the rally from the double bottom. Now the market awaits the next key risk event in the Non-Farm Payroll: Forecast 209K, previous 243K.
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Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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