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Fan Yang

USD/CAD Confirms Breakdown of a Rising Channel; 1.29-1.30 Could be the Target in an ABC Scenario

The USD is weak after the FOMC meeting on Wednesday (6/19). We saw $USDJPY break below a key support around 108. The In similar price action, the $USDCAD pair is confirming a previous bearish break down of a rising channel.

USD/CAD Daily Chart

(click to enlarge)

Bears Taking Over:
- As we can see, even before the FOMC meeting, USD/CAD was struggling to sustain its prevailing bullish trend since 2018.
- The last bullish drive occurred late 2018. But after price stalled around 1.3660, the pair started falling sharply. 
- Still, for most of 2019,price remained above the rising channel support.
- But already, we can see that the bullish attempt from February through May was choppy compared to the sharp decline in January. 
- More recently in June, price started to fall sharply again. This juxtaposition of sharp bearish swings vs. choppy bullish ones suggest bears are in control.
- Then, we saw a bearish breakdown of the channel support and the 200-day simple moving average (SMA).
- But before this bearish break extended, price rebounded to test the support/resistance pivot at 1.34. 
- The rejection at 1.34 was already a sign that bears were in charge.
- After the FOMC meeting confirmed its dovish guidance, USD weakened further, and the USD/CAD pair broke below the previous June-low. 
- Now it looks ready to fall to the 2019 lows around 1.3090-1.31.
- I think this low will eventually break down as well and USD/CAD will open up the 1.2785 support pivot from October 2018. 
- We might see some "stickiness" around 1.29-1.30 as well.
- This bearish scenario to the 1.29 area would constitute an ABC correction.

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