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USD/CAD - Potential Bullish Continuation after Poor Canadian Data

USD/CAD has been consolidating in what appears to be a descending triangle as we can see in the 4H chart. After almost reaching 1.28, USD/CAD fell to 1.2360 and has been consolidating throughout February so far. 

On Friday, we saw weak Canadian retail sales data:
CAN Retail Sales m/m (Dec.): -2.0%; Forecast: -0.3%; Previous: 0.4%
Core Retail Sales m/m (Dec.): -2.3%; Forecast: -0.7%; Previous: 0.6%

This was the sharpest month to month decline for the headline reading since Dec. 2012 (-2.1%) and pressured the loonie.

USD/CAD 4H Chart 2/22

(click to enlarge)

The 4H chart shows that after the Canadian retail sales data, USD/CAD rallied relatively sharply, but is still within the descending triangle. If price starts this week and is able to push above 1.26, USD/CAD would clearly be back above its cluster of 200-, 100-, and 50-period SMAs as well as the triangle pattern. This would expose the 1.28 area, with risk of extending higher. 

USD/CAD Daily Chart 2/22

(click to enlarge)

The monthly chart shows that above 1.28, there is a key resistance around 1.30. The 1.30-1.3060 area represents the 2008-2009 highs. So, while there is a potential bullish continuation signal if price pushes above 1.26, we should limit the bullish outlook first to 1.28, then to 1.30.