Technical Overview - USDCAD, EURCAD, AUDCAD and CADJPY

On Wednesday, the Canadian Dollar underperformed against majority of its counterparts except for the broadly weakening USD. The USD weakness was led by disappointing monthly retail sales data that fell short of the consensus forecast. On Thursday, CAD continues to remain weak against EUR but is trading in a narrow trading range with slightly positive bias against USD, AUD and JPY. Given the backdrop, here is a technical overview for USDCAD, EURCAD, AUDCAD and CADJPY.

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After consolidating in a trading range for nearly three month, the pair broke on the downside, thus completing the rectangle pattern and forming a near-term top for the pair. The pair subsequently broke below 100-day SMA and is currently trading below 1.2000 psychological mark, also coinciding with 38.2% Fib. retracement level of the pair's big move witnessed from July 2014 to Jan./March 2015 highs. This 1.2000 mark now seems to act as immediate resistance on the upside, which if decisively conquered could possibly trigger a near-term short-covering rally towards 1.2150-60 horizontal resistance area. However, considering that the pair has broken below important support levels and is sustaining its weakness below 1.2000 psychological mark, in the near-term it seems vulnerable to continue its depreciating move towards its next major support confluence near 1.1750-30 area, comprising of 200-day SMA and 50% Fib. retracement level.


In April, the pair dropped to a 24-month low but managed to hold 1.3000 psychological mark. Since then the pair has rebounded significantly and now on short-term daily chart seems to be forming a possible reversal pattern, Inverted Head and Shoulders, suggesting that the near-term bottom for the pair has been tested and from current levels the pair is more likely to move higher in the near-term. The pattern, however, would be confirmed only once the pair manages to decisively strengthen above the neck-line resistance near 1.3750-60 area. A decisive move above the neck-line resistance for extending the near-term up-move initially towards 1.4000 psychological mark resistance, also coinciding with 38.2% Fib. retracement level of March 2014 to April 2015 big downfall. Meanwhile, a drop below 1.3600 immediate support is likely to find support near 1.3500-3480 area. Major downside support, however, is now pegged near 1.3400 mark, which if broken might negate the bullish reversal chart-pattern and increase the pair's vulnerability to retest 1.3220-3200 support area.


Similar to the pair's earlier recovery attempt from 94.00 mark support, rallies beyond 100-day SMA, towards 200-day SMA are getting sold into, suggesting the possibilities of a fresh leg down. The possibilities of further downfall would be materialized only once the pair drops back below its immediate support near 0.9600-0.9580 zone. Weakness below this immediate support seems to open room for a retest of the very important support area near 0.9400 round figure mark and the fall might get extended towards 61.8% Fib. expansion level support near 0.9320-0.9300 area. Alternatively, a decisively move above 0.9700 immediate resistance, marked by a short-term descending trend-line, might lead to a retest of 200-day SMA strong resistance, currently near 0.9760-80 region. Further, should the pair manages to break past and sustain its strength above 200-day SMA resistance, it could possibly make an attempt to make a strong up-move towards reclaiming parity level (0.9980-1.0000 resistance area).


Bounce-back from a 10-month low continues lifting the pair, which seems to be trading in a well-established short-term ascending trend-channel. The pair is now within the striking distance of reclaiming 100.00 psychological mark, which if conquered seems to further boost the pair towards its next resistance confluence near 100.80-101.00 area, comprising of the upper trend-line resistance of the ascending channel and 61.8% Fib. retracement level of Dec. 2014 to Jan. 2015 steep decline. A decisive move 101.00 round figure level, marking an upside break-out from the short-term ascending channel might now negate any near-term bearish view and the pair then might continue rising in the near-term towards a major up-side resistance near 103.80-104.00 zone. On the downside, 99.20-99.00 area, representing 50% Fib. retracement level now seems to protect immediate downside. Failure to hold this immediate resistance and a subsequent break below 98.80-70 intermediate support seems to drag the pair back towards testing 200-day SMA support, currently near 97.70-50 area.


Haresh Menghani
Senior Market Analyst
Admiral Markets
At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», reference to the company site is obligatory.

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