Short on the USD/CAD after retest of 1.27

2017年12月5日

For those who read our previous report on the USD/CAD you may recall that we were looking to sell the retest of the 1.27 handle. Here’s why:

• Upside remains capped on the weekly timeframe at 1.2778. The current weekly resistance level on the USD/CAD shares a strong history that dates back to early 2004, so it is not one to ignore! Couple this with the fact that last week’s weekly action chalked up a strong-looking bearish selling wick (likely capturing the attention of candlestick traders), further selling could be in the offing this week. In the event that the market continues to dip south from here, traders’ crosshairs will likely be fixed on the weekly demand at 1.2432-1.2558. Boasting a strong base, this demand area communicates strength and, therefore, will likely hold back sellers should the area come into play.
• Daily price completely erased last week’s gains on Friday in the shape of a strong full-bodied daily bearish candle. This has perhaps opened up downside to daily support at 1.2598 this week (merges with a 61.8% Fib support at 1.2618).

As H4 price closed below 1.27 on Monday and struck a low of 1.2656, and then followed through with a retest of 1.27 as resistance in the shape of a near-full-bodied bearish H4 candle, the team took a short trade at 1.2672, and placed a stop at 1.2717.

Suggestions: The first take-profit level, as highlighted in yesterday’s report, will be set at the 1.26 handle, followed by the top edge of the weekly demand base at 1.2558.

Data points to consider: US trade balance at 1.30pm; US ISM non-manufacturing PMI at 3pm; Canadian trade balance at 1.30pm GMT.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.2672 (live stop loss: 1.2717).