USD/CAD is still bearish at the time of writing as the DXY (USDX) is still trapped below strong immediate upside obstacles. Still, the price action has signaled a potential short-term bullish reversal after reaching historical support.
The pair has printed a major bullish engulfing in the short term signaling that USD/CAD could start increasing again. Though, we need confirmation before deciding to go long on this pair. The USD is somehow expected to increase after the US data have continued to come in better than expected.
USD started to increase after the US inflation data beat expectations in yesterday’s trading session. Now, the Unemployment Claims have dropped from 507K to 473K in the last week, while the PPI and the Core PPI increased more than expected which is good for the USD.
Technical Analysis!
USD/CAD has found support right on the weekly S1 (1.2046) registering only a false breakdown with great separation below 1.2060 static support.
Now is challenging the downtrend line and 1.2127 static resistance. A false breakout above these levels could invalidate the bullish scenario, upside reversal. 1.2157 is seen as critical resistance, a valid breakout above it could signal a new leg higher.
Closing and stabilizing above the downtrend line and making a new higher high could bring a good long opportunity.
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