Overview:– By analyzing the daily chart of the pair we can see that pair is rising up with strong bullish momentum. It risen up from 1.2956 continuously till 1.3328 level which is previous swing’s high. Overall pair is making successively higher highs and higher lows and heading north side with clear bullish momentum. The current picture depicts that bulls have become tired now as it is a potential resistance level as pair has received supply pressure from this level three times earlier also so this time also we are expecting the same.
Technical Analysis:– From technical prospective we can see that a V shape recovery has been completed like a cake walk. Overall bulls are driving the car and heading north side but now they are trying to hand over the game in the bear’s hand which will be an early call, but if today bears able to take it down below 1.3250 level then it will be confirmation of bears stake and it will open the way towards the 1.3100 level in near term. Overall pair is trading above all the major and minor EMA line which is providing strength in the pair so it is not going to be easy for bears.
We are seeing trend line support holding and a third test is likely further ahead which leaves plenty of upside territory to target before the next meaningful test. However, for the meantime, we are seeing a very overbought last leg of a W-shaped corrective wave and reversal which would usually draw in bargain hunters looking for cheap CAD.
Fundamental Analysis:- The USD/CAD pair continued losing ground through the early European session and is currently placed near the lower end of its daily trading range, just below the 1.3300 round-figure mark.
The pair failed to capitalize on the previous session’s goodish intraday positive move to four-month tops and met with some fresh supply on Tuesday. A modest rebound in crude oil prices underpinned demand for the commodity-linked currency. Despite concerns over the economic impact of the deadly coronavirus, the expected new round of economic stimulus measures by China provided a modest boost to the global risk sentiment. This eventually triggered a rally in equity markets and led the recovery in oil prices, now up over 1% for the day.
Meanwhile, the US dollar stood tall near multi-week tops and was further supported by a strong pickup in the US Treasury bond yields. traders, however, seemed unimpressed by sustained USD buying interest, rather preferred to lighten their bullish position ahead of the FED Chair Jerome Powell’s semiannual testimony before the congress.
The RSI arrived into overbought territory which is providing trend reversal signal whereas MACD still holding the bullish crossover in its hand and providing us bullish signal for the time being. Odds are in favor of bears and intraday bias remains bearish on the pair as long as 1.3350 level remains intact. It’s an early sell call but there is good risk and reward ratio to sell the pair here.
What next:- The 1.3350 level is key resistance level followed by 1.3400 level whereas 1.3150 level is key support level follwed by 1.3100 level.
Trade idea:- Based on chart and studies above we can suggest to our readers that go for sell around 1.3300 level for the target of 1.3250 level and 1.3200 with the tight stop loss of 1.3350 level.
