Of-late, stability in crude oil prices seems to have halted broad weakening of the Canadian Dollar against other major currencies. Apart from crude-oil prices investors will remain concerned over the possible resolution to the Greek drama.
Meanwhile, here is a technical update on some important CAD pairs - USDCAD, EURCAD, GBPCAD and CADJPY.
After witnessing some minor profit taking from its highest level since March 2009, the pair now seems to have moved in a narrow trading range, possibly consolidating before deciding the next leg of move. From current levels, 1.2520-1.2500 horizontal zone seems to provide immediate support. This is closely followed by a strong support near 1.2400-1.2380 area. A decisive drop below 1.2400 mark now seems to trigger extension of the pull-back from multi-year highs, immediately towards 1.2280 support zone marked by 23.6% fib. retracement level of July 2014 to Jan. 2015 up-swing. The pull-back could further get extended towards testing sub-1.2000 mark support representing 38.2% Fib. retracement level. Alternatively, a decisive strength above 1.2700 level, marking multi-year daily closing high, is likely to provide the required momentum to lift the pair further towards testing the very important 1.3000 mark resistance, earlier tested in March 2009.
The pair continues facing difficulty in decisively breaking above the very important 200-day SMA resistance, currently near 1.4380-1.4400 area. Reversal from important resistance and a subsequent break below 23.6% Fib. retracement level support of March 2014 to Jan. 2015 downfall near 1.4200-1.4180 zone is likely to trigger a fresh leg of weakness towards an important psychological mark support near 1.4000 level. Moreover, a decisive break below 1.4000 mark would now open room for extension of the near-term downward trajectory, initially towards 1.3850 intermediate support and eventually towards 1.3650 support area. Meanwhile on the upside, 200-day SMA remains immediate important hurdle and should the pair manage to conquer this immediate strong resistance, it could then be headed towards its next major resistance near 1.4750 area, with 50% Fib. retracement level near 1.4650-60 as intermediate resistance.
Although on Wednesday, the pair jumped to its highest level since June 2009, but on 4-hourly chart it seems to form a bearish Rising Wedge chart pattern. The pattern, however, gets negated should the pair break past 1.9360-70 resistance marked by an ascending trend-line, constituting towards formation of the bearish pattern. A decisive break above this resistance seems to further boost the pair in the near-term towards 1.9850 resistance area. Alternatively a drop below 1.9100 immediate horizontal support, leading to a break below the lower trend-line support of the possible rising wedge formation seems to trigger a short-term corrective move for the pair towards 1.8750 support, low tested in Feb. 2015 and coinciding with 38.2% Fib. retracement level of Jan.-Feb. 2015 up-leg. The corrective move could further get extended in the near-term towards 50% Fib. retracement level support, near 1.8550 level.
After clearing a short-term descending trend-line resistance, the pair seems to have moved in a short-term ascending trend-channel, possibly suggesting continuation of the recovery trend in the near-term. The lower trend-line support of the channel also coincides with 23.6% Fib. retracement level of Dec. 2014 to Jan. 2015 downfall. Hence, until the pair continues holding above 94.80-94.60 support, it seems more likely to extend the near-term recovery towards its next major resistance near 97.30-97.50 area, comprising of 38.2% Fib. retracement level and the upper trend-line resistance of the short-term ascending channel. However, should the pair decisively break below 95.00 mark could possibly lead to further downward momentum back towards 93.00 strong support area.
Senior Market Analyst
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