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USD/CAD Daily Forecast – Descending Triangle Formation Signaling an Imminent Breakdown

Nikhil Khandelwal

The upward rebound price action from 1.3023 level on Tuesday seemed to pause near 1.3080/90 range level today. However, the USD/CAD pair appeared to head south after touching the 1.3093 mark in the early hours. Anyhow, the 1.3068 support line acted as a firm cushion, limiting daily losses.

The initial slump in the Loonie pair occurred in the backdrop of Crude price upsurge. The Oil prices gained today amid the release of the API Weekly Crude Oil Stock report calculated since July 12. This API Weekly data reported -1.401 million over the last -8.129 million.

“Market participants are looking ahead to the weekly EIA oil inventory data for the US, expected to show yet another drawdown,” said Abhishek Kumar, head of analytics at Interfax Energy in London

Influential Economic Events

On Wednesday, the market stays attentive to the upcoming BoC June YoY Consumer Price Index (CPI) Core. The Street expects this index to report a 0.5% growth this time. Anyhow, the consensus seems to keep a bearish stance over the June YoY CPI figures, expecting a 0.4% fall.

On the US economic docket, traders must have a closer look over the June MoM Housing Starts and Building Permits data releases.

At around 14:30 GMT, the EIA Crude Oil Stocks Change computed since July 12 will come out. This time, the market anticipates the figures to report near -3.375 million over the previous -9.499 million.

Technical Analysis

1-Week Chart

USDCAD 1 Week 17 July 2019

The USD/CAD appeared to remain sandwiched between the overhead 200-day SMA and below lying 100-day SMA. Notably, on the upper side, the stronger SMA confluence and 1.3403 resistance stood as the key barriers. Hence, the downward pressure appears stronger than the upward push. Nevertheless, on any move to the downside, the pair would have to first tackle the robust 1.3003 support line and then the 100-day SMA.

4-Hour Chart

The Loonie pair was forming a descending triangle, showing continuation of a bearish trend.

USDCAD 240 Min 17 July 2019

The pair breached above the 50-day near-term SMA in the Asian trading session. However, the overhead 100-day SMA capped further gains, ordering the bears to perform a rebound price action. As a result, chances of nearby breakdown seems quite imminent, seeing the bearish continuation triangle formation. If at all the pair manages to make a breakout and move above the aforementioned triangle vicinity then the 200-day SMA or 1.3219 would get activated. Indeed, the 1.3003 support line drawn from the 1-Week Chart might play its role if it encounters a drowning Loonie pair.

 

This article was originally posted on FX Empire

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