Recovery in crude oil prices of-late seems to have triggered some buying interest in the Canadian Dollar against other major currencies. Investors, however, will await for the release of monthly jobs report from the US and Canada before determining the near-term direction for CAD pairs.
Given the backdrop, here is a technical update on CAD pairs - USDCAD, EURCAD, CADJPY and how they are likely to move in the near-future.
After jumping to its highest level since March 2009 in the previous week, the pair has witnessed some profit taking move during the current trading week. This week's pull-back would mark the pair's first weekly decline after eight weeks of consecutive gains. From current levels, 1.2380 level seems to provide immediate support which if broken is likely to trigger additional weakness at least till 1.2280 level marking 23.6% Fib. retracement level of July 2014 to Jan. 2015 up-swing. Moreover, a decisive weakness below 23.6% Fib. retracement level is likely to trigger continuation of the short-term corrective move towards testing sub-1.2000 mark representing 38.2% Fib. retracement level. Alternatively, strength above 1.2560-70 immediate horizontal resistance is likely to be extended further towards 2015 daily closing high level resistance near 1.2700-1.2710 zone.
Although the pair seems to have found some intermediate support at 50% Fib. retracement level support of Aug. 2008 to March 2013 bull-run, it still failed to clear its immediate strong resistance at 200-day, currently near 1.4400 mark. The pair currently is holding stable near 38.2% Fib. retracement level. Should the pair manage to clear this 200-day SMA strong resistance, it clearly seems to be headed towards 23.6% Fib. retracement level, its next major resistance near 1.4750 area. Alternatively, weakness below 1.4200 mark, leading to a drop below 1.4180-70 area is likely to be followed by additional weakness towards the very important psychological mark support near 1.4000 level. Further, reversal from 200-day SMA and a subsequent break below 1.4000 mark seems to open room for continuing the pair's near-term downward trajectory initially towards 50% Fib. retracement level support near 1.3850 and eventually towards its next support near 1.3670-50 area, marking a short-term descending trend-line support.
The pair continues trading within a short-term descending trend-channel extending from Dec. 2014 but on shorter time-frame it seems to have moved in an ascending trend-channel trading pattern. Hence, till the pair continues holding above the lower trend-line support of the ascending channel, currently near 93.60-50 area, it seems to make an attempt to test the upper trend-line resistance of the channel, near 96.00 region and could then continue appreciating towards the upper trend-line resistance of the descending trend-channel, currently near 96.80-97.00 zone. Meanwhile, a drop below 93.60-50 support is likely to trigger fresh leg of downward momentum for the pair, initially towards 93.00 strong support and eventually drop to the recent low of 92.00 tested on Jan. 30.
Senior Market Analyst
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