Pullback in Crude Oil prices strengthened the Canadian Dollar (CAD) against majority of its counterparts on Monday; however, market players are waiting for the monthly GDP details, scheduled for Tuesday, and the monetary policy meeting by the Bank of Canada (BoC), scheduled for Wednesday, in order to determine near-term CAD moves. Even if market expectations aren’t favoring another rate cut by the BoC, any surprises could provide considerable weakness to the Canadian currency.
Given the backdrop, the following is a brief technical overview of USDCAD, GBPCAD, CADJPY and AUDCAD.
Symmetrical triangle formation continues signaling narrowing trading range of the USDCAD, which is presently testing the resistance-line of the formation, near 1.2555. Given the weaker Canadian fundamentals, chances are higher that the pair rallies to 1.2620 and to the 1.2700 mark on the break of 1.2555. However, a downside break below 1.2390 - 1.2385, encompassing support-line of the formation and the 23.6% Fibonacci Retracement Level of its October 2014 – January 2015 up-move, could immediately force the pair to test 1.2220, 50-day SMA. On the extended decline below 1.2220, the pair can test 1.2100 mark before declining to 1.1960 support, encompassing 50% Fibo. On the upside, a break of 1.2700 could further stretch the pair’s up-move towards 1.2800 mark before testing the 1.2930 horizontal line resistance. On the break of 1.2930, the pair can quickly surpass the 1.3000 psychological magnet.
Support-line of ascending trend-channel formation, near 1.9180 on the H4 chart, is likely restricting the GBPCAD decline. Moreover, weaker CAD signals the pair to re-test 1.9350 resistance level before rallying to 1.9400, 1.9480 and 1.9550 mark. On the break of 1.9550, the pair can rally towards the resistance line of the channel, near 1.9650, which can trigger reversal into the pair prices. Should the pair breaks below the 1.9180 support, it can immediately drift lower towards 1.9100 mark, breaking which the pair can test 1.8960 support level. A sustained break of 1.8960 could further weaken the pair towards testing 1.8750 and the 1.8560 which is likely limiting the near-term decline of the pair.
Also Watch: Weekly Overview of major currency pairs
Descending trend-line resistance, near 96.20, currently restricts the CADJPY up-move, breaking which 96.50 and the 97.50 are likely intermediate resistances for the pair before it rallies to 99.00 psychological resistance, also including 100-day SMA and the 50% Fibo of its December – January decline. A sustained break of 99.00 mark negates the chances of pair’s near-term decline and can fuel it towards testing 100.80 mark. On the downside, 23.6% Fibo, near 95.20, quickly followed by the 94.80 and the 94.00 mark can restrict immediate decline of the pair. On the break of 94.00 mark, also closing below 93.00, the pair could test sub-92.00 mark.
AUDCAD up-move seems supported by the ascending trend-line and the 38.2% Fibonacci Retracement Level of its September – December 2014 decline, near 0.9710 while the 50% Fibo level, near 0.9810 seems restricting immediate up-side of the pair. On the break of 0.9810, the 0.9860 and the 0.9900 mark, as signaled by the 200-day SMA, are likely consecutive resistances for the pair. Should the pair strengthen further above 0.9900 mark, surpassing 0.9910, it can test 0.9960 multiple resistance zone before crossing the 1.0000 mark. On the downside, a sustained break of 0.9710 could open room for the pair’s decline towards 0.9650 and the 0.9590, indicating 23.6% Fibo. On the break of 0.9590, the pair becomes vulnerable to test 0.9450 support levels.
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