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A few days ago on January 3rd, I wrote about a USDCAD short opportunity.
At the time, the pair was trading at 1.3513. It was also hours away from closing back inside an ascending channel that began in early October.
Although USDCAD didn’t retest the 1.3565 area as new resistance, it is down more than 200 pips since my last commentary.
It also closed below another key area yesterday.
The price action between November 20th and December 10th of last year indicates that 1.3315 is a price of some significance.
Yesterday’s 1.3299 close means that 1.3315 should begin to serve as new resistance.
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The 1.3315 area isn’t that far below former channel support. That area is closer to 1.3360.
All in all, I see further losses for USDCAD.
As for key support, the 1.3060 region has a lot going for it. It served as a pivot between mid-September and early November of last year.
We also have channel support just below 1.3060 near 1.3000. Either area could trigger an influx in buying pressure.
However, keep in mind we have a Bank of Canada rate decision and statement on Wednesday at 10 am EST.
An increase in volatility at this time is all but guaranteed.
As such, it may be best to wait until after tomorrow’s BoC decision to avoid the volatility that is likely to ensue.
But as long as USDCAD remains below former channel support near 1.3360/80, I will remain bearish with a target of 1.3060.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.
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