On Sunday I pointed out what appears to have been a false break on the USDCAD. The June 19 close put the pair above ascending channel resistance, but buyers failed to maintain the level as new support last week.
Additionally, a view of the weekly time frame shows that last week’s range engulfed the prior one. That isn’t surprising given that false breaks on the daily chart often carve pin bars or engulfing patterns on the weekly.
The new resistance level I pointed out on Sunday was 1.3240. That’s the approximate intersection of ascending channel resistance.
However, I also said to keep an eye on 1.3200. Here’s what I wrote:
That places resistance near the 1.3240 area, though I doubt buyers will be able to push prices that high in the coming week. Instead, I think the 1.3200 handle will attract selling pressure on a retest of the area as new resistance.
In summary, that gave us a 40 pip range between 1.3200 and 1.3240 to begin watching for opportunities to get short. Monday reached a high of 1.3225 before selling off, and Tuesday was a bit worse for buyers with a high of 1.3207.
The first key support level came in at 1.3120. Note how the pair has indeed encountered buying pressure at this level since Wednesday’s session.
Sellers need to secure a daily close (New York 5 pm EST) below the 1.3120 handle in order to push prices lower. Below that we have the 1.3000 region followed by 1.2870/80.
Keep in mind that we have the FOMC meeting minutes release today at 2 pm EST. That said, there isn’t much to do here until 1.3120 gives way, unless of course you already sold between 1.3200 and 1.3240.