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Fan Yang

USD/CAD completes double top after disappointing NFP

We looked at USD/CAD ahead of the Non-Farm Payroll report today and saw that it was forming a double top. This hinted at the market's lean towards a bearish reaction even before the NFP was released. (Did smart money get a whiff of the report before hand?) Just saying.
Now, the NFP indeed came in worse than expected, accompanied by lower than expected earnings growth as well. The market reacted by fading the USD. 

The USD/CAD for example completed a double top after the NFP. 

USD/CAD 1H Chart 9/2

(click to enlarge)

Pullback scenario:
- After a breakout form a double top, USD/CAD is heading towards the 1.30 handle and common support.
- Also note the 200-hour simple moving average right above 1.30.
- Finally, the RSI is below 30, which shows oversold condition unless the trend is bearish. In this case, we can see that the trend is actually bullish, and today's reaction could be simply a correction.
- Let's say USD/CAD does find support at or above 1.30. 
- We should still respect the near-term price top and anticipate resistance at 1.3080, the broken neckline that could turn into resistance.
- If 1.3080-1.31 holds as resistance indeed, there would be downside risk back towards 1.30, with the aggressive outlook being capped at 1.29.

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