Weekly
• Last Candlesticks pattern: Shooting doji
• Time of formation: 01 May 2017
• Trend bias: Sideway
Daily
• Last Candlesticks pattern: Bearish engulfing
• Time of formation: 5 May 2017
• Trend bias: Down
USD/CAD – 1.2540
As the greenback has remained under pressure after recent selloff below indicated previous support at 1.2969, adding credence to our bearish view that early erratic rise from 1.2461 has ended at 1.3794 earlier and the breach of said support at 1.2461 confirms another leg of major fall from 1.4690 is underway, hence bearishness remains for further weakness to 1.2400, then 1.2350-60, however, oversold condition should limit downside to 1.2300 and price should stay well above 1.2240-50, risk from there has increased for a rebound to take place later.
On the upside, whilst initial recovery to the Tenkan-Sen (now at 1.2558) cannot be ruled out, reckon upside would be limited to 1.2690-00 and bring another decline later. Above 1.2730-40 would defer and risk a stronger rebound to 1.2790-00 but reckon the Kijun-Sen (now at 1.2876) would hold from here and bring another selloff later. Only a daily close above the Kijun-Sen would abort and suggest a temporary low is formed instead, risk a stronger rebound to 1.2940-45 but price should falter below resistance at 1.3015.
Recommendation: Sell at 1.2690 for 1.2400 with stop above 1.2790.
On the weekly chart, as recent selloff has kept price under pressure and price finally broke below indicated previous support at 1.2461 (2016 low), adding credence to our view that the major fall from 1.4690 top has resumed, hence bearishness remains for this move to extend weakness to 1.2400, then towards 1.2300-10 but near term oversold condition should prevent sharp fall below 1.2240-50 and price should stay above 1.2175 (61.8% Fibonacci retracement of 1.0621-1.4690), risk from there has increased for a rebound later.
On the upside, although initial recovery to 1.2590-00 cannot be ruled out, reckon upside would be limited to 1.2690-00 and bring another decline later. Above 1.2790-00 would defer and bring a stronger rebound to 1.2850 but resistance at 1.2944 should hold from here. Only a weekly close above the Tenkan-Sen (now at 1.2981) would suggest a temporary low is formed, bring retracement of recent decline to 1.3015 resistance but price should falter below the Kijun-Sen (now at 1.3104) and bring another selloff in late Q3.
