USDCAD - Scope for a downside correction today

[PIA_First_IC]

USD INDEX- We expressed some caution yesterday with the USD index close to the 161.8% extension level of 90.25 (from 88.26-89.49). As long as we fail to breach and hold below the trend line support at 89.65, the medium-term bias remains bullish. However, we have to be prepared for the possibility of substantial USD correction lower today.

 

With Canadian unemployment figures today, we could see a deeper correction.

 

Here is the technical picture:

 

Monthly: Inside the Ichimoku cloud. This normally results in the lower timeframes having mixed and volatile trading.

 

Weekly:  The medium-term outlook remains bullish with the pair trading inside the Ending Wedge formation. DeMark posted an exhaustion 13 count at the low.

 

Intraday - We have rallied to the wedge target of 1.2585. Commodity currencies have a tendency to stretch to the 423.6% extension of the first wave before a reversal is seen (correction). This is located at 1.2598 (from 1.2250-1.2332). We are holding in this zone. Bespoke support is seen at 1.2470

 

Forming and Ending Wedge with bearish divergence, chart makes a higher high while the oscillator makes a lower high. On a break of 1.2570, the measured move target is 1.2492

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