The USD/CAD has found strong resistance in yesterday’s
trading session and then has started to decrease, the price has resumed the
bearish momentum from yesterday and now is seeking or strong support. We could
have some volatility today on this pair after the US economic data will be
released and after the BOC Rate Satatement release, the Bank of Canada is
expected to maintain the rate on hold at 0.50%, the Loonie could plunge only if
the BOC will cut the interest rate.

The US dollar has dropped unexpectedly in yesterday’s trading
session even if the New Home Sales economic indicator has increased from 531K
to 619K in April, has increased much more compared to the 521K estimate and has
reached the highest level after December 2007. 
The US is to release the Flash Services PMI today, which could increase
from 52.8 to 53.1 points, signaling that the expansion continues, while the
House Price Index could increase by 0.4%. Moreover the Goods Trade Balance
could drop further and could reach the -60.1B level, this isn’t a good news for
the greenback, the USD is still waiting for a bullish spark.

The USD/CAD continues to increase inside of the ascending
pitchfork’s body, has managed to bounce back from above the lower median line
(LML) of the ascending pitchfork and now is targeting the median line (ML), the
price is also approaching the 38.2% retracement level, he could find strong
resistance at the confluence between the 38.2% level and the median line (ML).
The currency pair could become strongly bullish only if the price will jump and
stabilize above the median line (ML) of the ascending pitchfork, the price
maintains the bullish perspective as has managed to climb again above the
1.2864 level, the rate is trying to recover after the last massive drop, could approach
the highest high only if will have enough power to climb above the 61.8%
retracement level.

The USD/CAD bullish momentum was stopped by the 1.3153 horizontal
resistance in yesterday’s trading session, the price has retreated a little,
but the perspective remains bullish on the short term as long as the price is
trading above the 23.6% retracement level and above the 1.2864 horizontal
support. 

I’ve added the H4 chart to show yo better the short term price
action, you can see that the price has found temporary resistance at the right
above the 1.3153 horizontal resistance and now could reach and retest the lower
median line of the ascending pitchfork, the perspective remains bullish on the
short term as long as the price is trading inside the ascending pitchfork’s
body, the major upside target remains at the 38.2% retracement level and at the
median line of the long term ascending pitchfork, maybe will have  clear direction after the BOC Rate Statement.

The Canadian dollar could edge higher even if the United States
Crude Oil Inventories will drop as expected, the Oil will increase further and
will lift the Loonie, the US Crude Levels could drop sharply from 1.3M to -1.7
million barrels, could reach the lowest level of the last 2-months.

A broader drop could come if the price will escape from the short
ascending pitchfork, the pair could fall to retest the 23.6% retracement level
before will resume the upward movement.  

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