USD/CAD Violates Triple Bottom Level – Is it a Good Idea to Sell?
Arslan Butt • 2 min read
The USD/CAD closed at 1.35451, after placing a high of 1.35813 and a low of 1.35437. The USD/CAD pair followed its previous day’s bearish track, posting losses on Friday, on the back of decreased demand for the US dollar, in the absence of US traders. There was an Independence Day holiday in the United States, which resulted in limited market participants and minimal movement of the pair.
On the WTI Crude Oil front, the crude oil prices gained more than 1%, succeeding in posting its first daily close above $40 in almost ten days on Thursday. However, on Friday, crude oil faced some pressure, due to the decreased number of traders on the market and increased risk appetite.
However, in the late session, crude oil regained its pace and recovered most of its daily losses on Friday, on the back of the US & China’s positive economic data. It raised the bars for sharp V-shaped economic recovery, leading to increased oil demand across the globe.
The rising crude oil prices strengthened commodity-linked Loonie on Friday, which exerted negative pressure on the USD/CAD pair, and as a result, the pair declined. The US dollar was weak across the board, with the US Dollar Index falling more than 0.1% on the day, to near 97.20, which also exerted a negative impact on the USD/CAD pair on the last day of the week.
In the absence of any macro-economic data from the US and Canada, the USD/CAD pair mostly followed the previous day’s movement, extended its daily losses.
The increased number of coronavirus cases in the United States and across other countries, along with the reports of renewed lockdown measures from many countries, kept weighing on the market sentiment. Due to its safe-haven status, the US dollar kept a lid on the additional losses in the USD/CAD pair on Friday, giving the pair a minimal bearish candle.
Daily Technical Levels
Pivot point: 1.3557
The USD/CAD has violated the double bottom support level of 1.3545, and is now working as resistance. Below this, the USD/CAD has the potential to drop further until the next support area of 1.3480. On the hourly chart, the USD/CAD is also holding below 50 periods EMA, which is providing resistance at around 1.3560. Considering that the MACD and RSI are supporting the selling bias in the USD/CAD, let’s look for selling trades below the 1.3550 level today. Good luck!