[DanRath]

USD/CAD – Despite the sharp sell off from yesterday’s peak leaving a bearish “shooting star” candle on the daily chart, to reinforce strong resistance we see in the 1.11 area, downside follow through today has been limited. Short term price action suggests firm support at 1.0870/75 intraday and an underlying bias to perhaps have another run at the topside in the next 24 hours or so. We still prefer to look at USD strength – especially in the 1.10/1.11 area – as a selling opportunity from a longer term point of view. Broadly, we still think this market is in a medium term decline with the July/August price action representing a consolidation (bear flag/wedge?) ahead of the next leg lower. We spot strong short and medium term resistance at 1.1100/30 and minor support at 1.0830
below 1.0870/75. Key short term support (potential short term double top trigger) is 1.0721.

[DanRath]

USD/CAD – Signs of indecision remain on the daily chart, with USD/CAD still running
into a gamut of resistance points in the high 1.10/low 1.11 area (200-week MA at 1.1097, 55-day MA at 1.1127 and a collection of recent highs between 1.1103/23)USD/CAD recovered from intraday weakness yesterday and again so far today but there is still good supply evident on strength. Technically, we think the market is close to a short term top, given the resistance points noted above and the rather trendless nature of trading at the moment. As such, we remain better sellers on USD strength at the moment and consider a push back down to the 1.0750/1.08 range a little more likely than a move to fresh short term highs. More broadly, we still think the market is consolidating the July move lower in a potential bear flag/wedge formation; if we are correct, a break of key support between 1.0720/60 almost certainly implies new lows for this move down.