Talking Points
USDCAD trading near highs of multi-month consolidation pattern
Weekly opening range in focus- break to offer conviction scalp bias
Event risk on tap from US & Canada this week
USDCAD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
USDCAD in consolidation formation after breaking multi-year TL in January
Key resistance 1.1130/57- bearish invalidation
Breach targets objectives at 1.1223/38 & 1.1300
Support 1.1030, 1.0970- bullish invalidation
Broader outlook constructive above 1.0825/30
Daily RSI challenging 50-break (bearish)
Key Event Risk: FOMC Interest Rate Decision on Wednesday, US Existing Homes Sales on Thursday & Canadian Retail Sales & CPI on Friday
USDCAD Scalp Chart
Notes: Last month we highlighted an outside day reversal ahead of key support at 1.0905 that shifted our attention back to the topside of USDCAD. The resulting rally achieved two of our three objectives before failing at the 1.1157 target. The March open looks to have formed just below this region and while our broader outlook remains weighted to the topside, we cannot rule out at test of the multi-month consolidation pattern we’ve been in since the January high. Bullish invalidation has now been brought up to 1.0970.
The immediate focus is on the weekly opening range which we’ll define as 1.1030/40 – 1.1106 (taking into account key 6.18 ratios just below the NY low). Note that there is significant event risk on tap this week with the FOMC policy decision on Wednesday and key Canadian data prints on Friday. We’ll respect a break-out of this range heading into the end of this week while noting that a downside break of the consolidation pattern would shift our attention down towards 1.0905 and key support at 1.0825/30.
A minor trendline dating back to the monthly low gave out overnight and we’ve now rebounding off it as resistance. We seem to be carving a short-term embedded channel off last week’s high and near-term the momentum remains heavy with an RSI resistance trigger pending as a warning on short exposure. Bottom line: we favor the broader topside play but if the weekly opening range low gives out, we may have another low to make before heading higher. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Significance
Resistance Target 1
30min
1.1077
38.2% Retracement
Bearish Invalidation
30min
1.1106
23.6% Retracement / Weekly ORH
Break Target 1
Daily / 30min
1.1125/30
61.8% Ext / Jan 31st Close
Break Target 2
Daily / 30min
1.1157
100% Ext / (March High 1.1152)
Break Target 3
30min
1.1187
88.6% Retracement
Break Target 4
Daily
1.1223/38
2014 High / 50% Retracement / 100% Ext
Break Target 5
Daily
1.1300
March 2006 Low / Pivot
Bullish Invalidation
Daily / 30min
1.1030/40
61.8% Retrace & Ext / Last Wk’s Low / Wkly ORL
Break Target 1
30min
1.0999-1.1005
61.8% Fib Ext(s) / 100% Ext
Break Target 2
Daily / 30min
1.0970/76
78.6% & 76.4% Retracement(s)
Break Target 3
30min
1.0954
Monthly ORL
Break Target 4
30min
1.0930
1.618% Ext
Break Target 5
Daily
1.0905
50% Retracement
Break Target 6
Daily
1.0825/30
61.8% & 38.2% Retracement(s)
Average True Range
Daily (20)
75
Profit Targets 17-19pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
NZDUSD Rallies Into Key Resistance on RBNZ- Bearish Below 8580
Is an AUDUSD Top in Place? Shorts at Risk Above 8920
Scalping the EURUSD: Breakout or Fakeout?
GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754
Gold Rally Vulnerable Sub $1361- March Opening Range, NFPs in Focus
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list
Join Michael for Live Scalping Webinars on Tuesday-Thursday morning this week on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)
Interested in learning about Fibonacci? Watch this Video
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
