With the BOC decision out and Canadian jobs data out, I’m looking to set up this textbook on the Loonie pair this week.
While the Canadian dollar has enjoyed some bullish movement thanks to higher oil prices after the OPEC decision, buyers may back off as higher level events approach.
After all, the Bank of Canada is widely expected to sit on its hands again while the employment report may print a slower increase in employment for May.
Do you think that USD/CAD could bounce off this support area soon?
Forex USD/CAD for 4 hours Planned by TV
As you can see from the 4-hour chart above, this forex pair has been going back and forth between support around 1.3315 and resistance at the 1.3650 minor psychological mark.
The price is approaching range support at the moment, and the technical indicators are indicating that another bounce is imminent.
For example, Stochastic is already reflecting oversold or exhausted conditions among sellers, so a shift higher would confirm the return of bullish sentiment.
Meanwhile, the 100 SMA remains above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than a breakout.
A dovish BOC statement and/or a pessimistic Canadian jobs report could be enough to encourage Canadian bears to get out, which could lead to a rally back to the top of the range or at least until the area of interest in the middle.
On the other hand, the breakdown may trigger a downtrend that is at least as high as the rectangle pattern, so stay tuned for the big bearish candles as well!