Weekly
• Last Candlesticks pattern: Shooting doji
• Time of formation: 02 May 2016
• Trend bias: Up
Daily
• Last Candlesticks pattern: Bearish engulfing
• Time of formation: 5 May 2017
• Trend bias: Up
USD/CAD – 1.3262
Although the greenback did drop in line with our bearish expectation and our short position entered at 1.3540 finally reached our downside target at 1.3340 (with 200 points profit), as the pair found support at 1.3165 and has rebounded, a doji star was formed on the daily chart, suggesting consolidation above this level would be seen and test of the Tenkan-Sen (now at 1.3354) cannot be ruled out, however, reckon upside would be limited to 1.3400 and bring another decline later. Above previous support at 1.3425-30 would defer and suggest a temporary low is formed instead, risk test of the Kijun-Sen 9now at 1.3468) but a daily close above there is needed to add credence to this view, bring test of resistance at 1.3542 first.
Below said support at 1.3165 would signal the fall from 1.3794 top has once again resumed and extend weakness to 1.3100-10, however, break of support at 1.3056 is needed to retain bearishness and add credence to our view that recent entire rise from 1.2461 has ended at 1.3794 earlier, bring further fall to 1.3009 support which is likely to hold on first testing and oversold condition should keep price above 1.2969 (previous chart support).
Recommendation: Short position entered at 1.3540 met target at 1.3340 with 200 points profit and sell again at 1.3380 for 1.3180 with stop above 1.3480.
On the weekly chart, although this week’s anticipated selloff after breaking previous support at 1.3387 adds credence to our view that top has been formed at 1.3794 earlier, as the greenback found support at 1.3165 and has rebounded, suggesting consolidation above this level would be seen initially and recovery to 1.3340-50 cannot be ruled out, however, said previous support should turn into resistance and limit upside, bring another decline later. Below said support at 1.3165 would extend the fall from 1.3794 top to 1.3080-85 and later towards 1.3000-10, however, near term oversold condition should limit downside to previous chart support at 1.2969, bring rebound later.
On the upside, although initial recovery to 1.3380-85 cannot be ruled out, reckon upside would be limited to 1.3425-30 and bring another decline. Only a weekly close above the Tenkan-Sen (now at 1.3480) would defer and suggest first leg of decline from 1.3794 top has ended, risk a stronger rebound towards 1.3547 resistance but still reckon upside would be limited to 1.3600-10, bring another decline. Above 1.3635-40 would defer and risk a stronger rebound to 1.3690-00 but still reckon upside would be limited and price should falter well below said resistance at 1.3794, bring another decline.
