The Loonie Is Getting Tippsy At The Top – Reversing Soon?
USD/CAD has been going wild on the top side in recent weeks/months. It broke above 1.36 last week without encountering much resistance even though it was a long term resistance level.
Some of that weakness in CAD comes from Oil prices which have been sliding in the last couple of weeks, but that's not the whole truth. We have seen some weak economic data from Canada, although most of the economic figures coming from Canada have been quite upbeat recently.
It's not the data either, so what is it? It's the market sentiment obviously. As we mentioned it before, market sentiment is running the show nowadays.
The moves to the upside have been pretty big, while the downside moves have ben quite shallow. But that's changing; last Friday we saw a 140 pip dive, while today the top side doesn't look so easy to take out.
Comparing to the last few weeks when the buyers were in full control, this sort of price action in the last two days tells us that the buyers don't feel so confident right now.
Have we reached a top for the time being? Oil has fallen nearly 10 cents lately, so the retrace seems to be coming close to an end.
If that's the case then expect USD/CAD to reverse or at least retrace some of the gains. I've been looking to open a long term sell forex signal in this forex pair and this might be the time.
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