Daily Price Action
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USDCAD Rally Snaps; Pair Loses 50 Pips in 60 Seconds

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

USDCAD bulls hit a major roadblock earlier in today’s session. In fact, it’s the same resistance area we looked at this past Monday.

The 1.3260/70 area is the intersection of the June 22nd and 25th lows and ascending channel resistance that extends from the October 2017 highs.

Today’s rejection from the area was so intense that the USDCAD lost 50 pips in just 60 seconds. It also puts the dollar pair at risk of closing below trend line support that extends from the April 17 low.

I know some will claim the 50 pip drop was the result of Canadian retail sales, CPI, or both. And you’d be correct from a fundamental perspective.

However, I can point out numerous occasions every week where fundamentals and technicals collide. At what point does it stop being a mere coincidence?

The fact is that the two (fundamentals and technicals) are not mutually exclusive. In other words, they can and do coincide and even compliment one another. Look no further than what happened to the USDCAD at 1.3260/70.

Now, keep in mind that there are a couple ways to draw the trend line you see below. One is how I plotted it on Monday, and another connects the May 22nd and July 11th lows.

If you use the former, the pair is trading below the trend line as I type this. However, if you use the two lows from May and July, the pair is just now testing the level at 1.3120.

Note that 1.3120 is also the location of a relatively significant horizontal level. As such, it may be prudent to wait for a daily close (New York 5 pm EST) below the 1.3120 area before considering an entry.

Doing so will also help you avoid entering on a Friday, which is less than ideal due to the potential for a weekend gap.

A daily close below the 1.3120 area would expose 1.3010 followed by 1.2870/80. Longer term, as long as the pair remains below that 1.3260/70 resistance area, a move toward ascending channel support near 1.2550 should not be ruled out.

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USDCAD ascending channel on the daily chart

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14 comments
Eddard Stark says

I think you are labeling too much levels. Nice analysis though!

Reply
    Justin Bennett says

    It’s a daily chart showing ten months of price action which is why it may look a bit crowded. However, the average distance between the horizontal levels shown above is about 130 pips.

    Reply
Iliyan Trifonov says

I’ve been waiting for today’s CAD pairs movements not knowing which direction the CAD will go. It was very interesting when finally the news went out and I saw the big black candle on the USDCAD chart. I switched to the minute timeframe and saw it happened in the last minute! Forex can be so amazing! But what I wanted to say is thank you Justin for comparing the fundamentals to the technicals and showing us that there’s a connection. I honestly thought today it was only the fundamentals that moved the price.

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Derrick says

Thanks very much

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matt says

hahahaha! it was a pips festival, at least i grab mine.
thks bro for the set-up and analysis, God bless

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Emuobo Agbahovbe says

Nice summary. Thanks

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Chayi Monday Abba says

Good day Justine.I only want to say thank you for your good work.I am a newbie into forex,when I had about forex around 2012,the news came to me that forex is a good business and there is money in it.I jump into it with a mindset to make that money withing a short period of time,you as a professional trader you know what I mean,”the truth about forex is that, going into it without the technical know-how one will look at it,as a business you don’t need to associate with”and that is exactly what happened to me,I almost heat forex trading untill a friend referred me to some of your articles.Mr justine the good work you’ve started keep it on,with some of your write-up about forex. I begin to look at forex trading as a business for one to be into it.I am praying that not too far to belong in your forex traders community.Thaks

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Funeka says

Thank you Justin your analysis helps a lot. Keep up the good work.

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Howard says

Big, fast drop in USDCAD today in response to Canada’s core retail sales growth m/m being much higher than expected: actual 1.4% vs 0.6% forecast & 0.2% prior. Definitely worth keeping an eye on calendar’s red news.

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    Howard says

    The strength of the set up is magnified, when fundamentals & technicals coincide.

    Reply
Bokang james says

So does it mean the pair is heading for a bulish or bearish move Mr Justin?

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Abraham Anangisye says

Thanks bro I’m happy with your comments especially yesterday’s on USDCAD you opened our mind to compare the fundamental and technical I saw it’s connection now Thanks again

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morris says

thanks a lot justine

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Asghar Ali says

I have read your every analysis when it was published so I concluded that your analysis is good.

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