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USDCAD - Scope for a downside correction today


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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.

USD INDEX 4.png

 

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

usdcad 1.png

In regards to the PIA analysis, no representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.

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