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Hourly USD/CAD Candle Chart


Channel Top at 1.0882 Serves as Initial Resistance as Retracement Unfolds
USD/CAD began a retracement phase last Thursday after prices registered a bullish trend reversal above a trendline at 1.0745. With an ascending channel pattern now in place as the correction unfolds, pullbacks to support at 1.0724 and 1.0679 are expected to attract short-term buying interest for an extension to the channel top at 1.0882. An hourly close above this level would project an extension to the 1.0934 level, which serves as secondary resistance. We note that 76.4% retracement of the July 29-August 4 decline at 1.0863 has contained advances so far, with the 61.8%, 50% and 38.2% retracement levels at 1.0819, 1.0783 and 1.0748 all providing some degree of short-term support to begin the week. Place stops below 1.0641 on an hourly closing basis.

CAD Crosses – Short-Term Outlook:

EUR/CAD: Resistance at 1.5439 and 1.5542 Expected to Attract Selling Pressure
EUR/CAD registered a bearish short-term trend reversal below 1.5407 on Friday. Based on this development, moves to resistance at 1.5439 and 1.5542 are expected to attract selling interest for an attempt to pierce initial support at 1.5323. An hourly close below this level would affirm our bearish stance and project additional losses to 1.5259 and 1.5235. Place stops above 1.5570 on an hourly closing basis.

GBP/CAD: Bearish Trend Reversals Below 1.8163 and 1.7995
Recent bearish trend reversals below 1.8163 and 1.7995 have shifted the price momentum back to the downside. Given these developments, resistance at 1.8053 and 1.8113 is expected to attract short-term selling interest for a test of nearby support at 1.7957. An hourly close below this level would add to downward momentum and project additional losses toward 1.7898, followed by 1.7826. Place stops above 1.8145 on an hourly closing basis.

CAD/JPY: Uptrend Support at 88.76 and 88.03
Friday’s bullish breakout above 88.96 suggests that pullbacks to support at 88.76 and 88.03 should attract short-term buying interest for an attempt to pierce the recent high at 90.30. An hourly close above this level would affirm bullish view and add to upward momentum by highlighting 90.72 as a target. Secondary resistance is located at 91.09. Place stops below 87.50 on an hourly closing basis.

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USD/CAD – Spot spent most of last week grinding up from the low 1.06 area but gains have stalled against minor trend resistance in the mid 1.08 zone so far; while spot ha looked well supported today, the rebound from last week’s low does not look especially powerful on the charts. Consider that spot is still very close to where we closed on Friday; buying power appears to be fading and may have peaked in the middle of last week. The mid 1.08 area is probably something of a make or break point for funds in the short term – above and we head towards 1.0950/1.1050 while holding below raises the risk of a drift back to the mid 1.07s. That may reflect the risk that the short term price action may be carving out a more obvious low/reversal (inverse H&S low, with 1.0851 currently the neckline); more work on the right hand side shoulder is required before a rally can occur though. Key short term support is 1.0790/00; after the failure to break significantly above 1.0850 Friday and today, a small double top would be triggered on a downside break. We still prefer to sell rallies at the moment but we’ll revert to neutral on a clear move above 1.0850.