Monday had the US dollar index add to losses, testing lows at 97.18, while WTI oil prices chalked up a decisive recovery, lifting firmly above $47/bbl. Collectively this guided USD/CAD lower, erasing more than 50% of last week’s upside.
Recent selling hauled the H4 candles south of the 1.34 handle, and tested two layers of interesting support at 1.3321 and 1.3336, two previous Quasimodo resistance levels. 1.34 remains viable resistance on the H4 scale, whereas a break of the current supports has 1.33 in sight.
Technically, yesterday’s sell-off should not come as a surprise. We have weekly price testing trend line resistance, from the high 1.3664, and the 2017 yearly opening level at 1.3434. Daily price also formed a clear-cut shooting star pattern (considered a bearish indicator at peaks) off the 2017 yearly opening level mentioned above on the weekly timeframe at 1.3434.
As for support on the weekly timeframe, a local trend line resistance-turned support, pencilled in from the high 1.3382, may enter view, with a break of here possibly clearing the runway to support at 1.3059. Support at 1.3348 on the daily timeframe is under threat, potentially setting the stage for further selling towards daily support at 1.3271.
Weekly price portends additional selling, as does daily price after overthrowing support at 1.3348. The problem arises on the H4 timeframe – the current H4 supports around 1.3336 and 1.3321, along with the round number 1.33, could hold price higher.
A H4 close beneath 1.33 has trend line support, extended from the low 1.2957, to target, shadowed closely by February’s opening level at 1.3236. Therefore, moves south of 1.33 could trigger seller interest today, in line with higher-timeframe flow.
Disclaimer: The information contained in this material is intended for general advice only.