The USDCAD moved to a new 6 week low today, and in the process moved briefly below the low from Monday at 1.3352 and the 50% midpoint of the 5 month trading range. That midpoint level comes in at 1.3352. The low on Monday was at 1.33563. The low today reached 1.3344. The current price is at 1.33557.
That keeps the sellers in play, but the failure may be a worry for sellers going forward. Sellers need to see the price move below that midpoint level and stay below. If successful, the rising trend line and the swing area between 1.3207 to 1.32299 would be targeted. The 61.8% retracement of the move up from the August low is also in that area.
Looking at the daily chart, recall that the price last Friday moved back below (and closed below) the 100 day MA for the first time since mid-August (blue line in the chart above). That move was helped by much stronger than expected Canada jobs data (+104K in new jobs below and 5.0% unemployment rate).
The corrective high this week reached a peak today at 1.3454, before rotating back to the downside. The 100 day MA is still rising and is at 1.3483. That is moving closer to the 38.2% of the move up from the August low at 1.34995. If the price should move back above the 100 day MA, the sellers would lose hope in the downside. Note also that there is a swing area near the 100 day MA (see red numbered circles) and the broken 38.2% is also near that area.
On the downside, a momentum move below the 50% retracement level to increase the bearish bias. A move below would have traders looking toward the swing area and 61.8% retracement near 1.3204 to 1.32299. That level should be a solid support level.
For now the price remains between the upper resistance and lower support, and near the 50% midpoint level and awaits the next shove.
This article was written by Greg Michalowski at www.forexlive.com.