Two weekends ago on July 1st, I discussed a possible false break situation on the USDCAD. The June 29th close indicated that buyers had failed to hold the pair above former ascending channel resistance near 1.3240.
The late-week selloff left us watching for selling opportunities between 1.3200 and 1.3240. We got what we were looking for between the 2nd and 3rd of July.
Following the retest of 1.3200/40, the next area I was focused on was 1.3120. Last Friday’s 1.3092 close meant that the 1.3120 area should begin to attract sellers on a retest of the region as new resistance.
Yesterday’s rejection from the area is a perfect example. However, the range of the pin bar that formed was far too small for me to consider a short entry.
So far today, buyers are back at it. They’ve managed to push the USDCAD 60 pips above yesterday’s close on an intraday basis.
This is when I like to sit back and wait. If the USDCAD is trading below 1.3120 at the New York 5 pm EST close, I may consider a small short position. Alternatively, a daily close above 1.3120 would leave me on the sideline.
Now, there is also a trend line support that extends from the April 17 low. This level became a factor with the July 9th bounce. As such, those looking to go short could wait for a close below this level; I may very well do the same.
As I’m writing this, the BOC rate decision and statement are 30 minutes out. These events will likely determine whether the USDCAD closes below 1.3120 or continues higher toward the recent 1.3220 highs.