Saturday, February 03, 2018

USD/CAD May Return Within The Consolidation

The rally I expected from USD/CAD finally became a reality, but that happened only after the NFP data was released yesterday.

Although I have drawn the trend lines of the downward movement and they look like the pair is forming a wedge the figure cannot be interpreted as such, because one of the most important features of such a figure is missing – reaching the trend lines at least four consecutive times. In this case that has happened just three times and then there was the breakout to the upside.

Meanwhile the pair deepened the RSI divergence with new lows of the price compared to the indicator and that required recalculating the possible limit of that divergence, which is at 1.2700 – 1.2710.

To the upside the first resistance is around 1.2580 – 1.2600, followed by 1.2700 – 1.2710.
Above that is the strong resistance at 1.2900 -1.2910 (in red), that the pair pulled back from after several unsuccessful attempts to break out above it.