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USDCAD: Rally Encountering Resistance, Mainly to Short at Highs

Forex MarketCOVID-19 PandemicThe Fed
Summary:

The dollar has weakened, boosting the non-US currency, the Canadian dollar. As the rebound is stalled, it is recommended to maintain short trades.

Sell USDCAD
End Time
CLOSED

1.34650

ENTRY PRICE

1.32400

TGT PRICE

1.37150

SL PRICE

1.33067 -0.00130 -0.10%

421

Points

Profit

1.32400

TGT PRICE

1.34229

CLOSING

1.34650

ENTRY PRICE

1.37150

SL PRICE

Fundamentals

Since the beginning of this year, the risk of a global recession has been rising amid widespread interest rate hikes by central banks. However, fears of a global recession prospect have been heightened by the recent severe pandemic situation in major Asian countries and their possible resumption of lockdown measures. Meanwhile, commodity currencies underperformed, and the hawkish stance from Fed officials continued to support the dollar, with USDCAD extending its rally.
However, previous lower-than-expected US inflation data raised hopes that the Fed would slow the pace of tightening. And traders seem reluctant to notice the risk of further increases in policy rates. The dollar has been weakening. Although there have been occasional rebounds, the strength is not strong enough. The signs of a shift in market trading are becoming more pronounced, which is undoubtedly a boon for non-US currencies that have been in the doldrums for a whole year.
In addition, rumors that OPEC+ will again present the idea of cutting production this Sunday offset demand concerns arising from the pandemic and recession. Therefore, international oil prices have been boosted again, further positive to the Canadian dollar, and USDCAD may come under pressure to the downside.

Technical AnalysisUSDCAD: Rally Encountering Resistance, Mainly to Short at Highs_1

Trading at the daily chart, USDCAD has consolidated at a high level for nearly two months and formed a "head and shoulders" top reversal trend pattern. After breaking support around the neckline at 1.3530, the peak signal strengthens further. The exchange rate has extended its volatile rebound and has encountered resistance at present. It has completed the retest of the neckline, which has regained the potential to fall deeper. It means that the return of the USDCAD downtrend does not be ruled out.
USDCAD: Rally Encountering Resistance, Mainly to Short at Highs_2
Looking at the 4-hour chart, the rally of USDCAD has slowed down in the short term, under pressure at the line of 1.3500, weakening to the downside.
It is recommended to go short at highs and try to take a short sale when the price rebounds to around 1.3470. The target is around the key support below at 1.3240 and the stop loss is around 1.3680.

Trading Recommendations

Trading Direction: Short
Entry Price: 1.3465
Target Price: 1.3240
Stop Loss: 1.3715
Support: 1.3250/1.3400
Resistance: 1.3850/1.3680
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or signal, or any other product is suitable for you based on your investment objectives and financial situation.

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7 years of stock market, foreign exchange, precious metal and other trading and analysis experience, based on fundamental, technical support, biased towards the top-down transaction logic, focusing on macro cycle and risk control, multi-purpose supply and demand theoretical prediction price Changes, balances the impact of transactions, chips distribution and market sentiment, and steady.

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Focus on

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