The USDCAD has been trending to the upside since bottoming on October 2 near 1.3472. The momentum over the last eight trading days has taken the price up to a high of 1.37826. That took the price to the low of the next swing area target between 1.3784 and 1.38036 (going back to April 2024 – see the red numbered circles on the chart below).
Today, the Canadian jobs data came out stronger than expected, and the price of the USDCAD fell (higher CAD). The price did move back below the 61.8% retracement of the move down from the August high. That level comes in at 1.3745. However, the momentum could not be sustained, and the price has snapped back higher. Going forward, it would take a move back below 61.8% retracement to give the sellers more comfort.
Is selling over? What would increase the bullish bias once after the sharp move lower?
Will the stronger number not phase the Bank of Canada rate-cutting agenda?
Drilling to the 5-minute chart below, the price action late yesterday saw the price move back down to test the rising 200 bar MA (green line on the chart below).
IN the Asian session tdday, the price moved below that lower MA line, but the momentum lower was not strong. Instead, the price traded higher with the MA line (see green line on the chart below) and then moved above the two moving averages and used the MA levels as a springboard to higher levels ahead of the jobs report.
When the employment data came in stronger than expected, the price fell sharply below those moving averages, but has since snapped back higher. The rebound has taken price back toward and now above those moving averages.That has the shorts scratching their heads and covering shorts. The buyers are back in control above those MAs.
The question going forward is can the price stay above those moving averages?
if it can, there could be some head-scratching and more short covering with the levels off the 4-hour chart up to 1.3803. If the price, cannot get above – or fails on the break above – the sellers are still “in play” and we will see more downside probing with the 100/200 bar MAs on the 5-minute chart, and the 61.8% retracement off the four-hour chart at 1.3745 as targets needed to be broken to increase the bearish bias.