USDCAD Big Selloff and Analysis
by: Colibri Trader
I have been doing my regular Sunday research and analysis and my attention stopped on the USDCAD pair.
I remember watching it in Friday just before the jobs report came out. Price was flirting with a major resistance area at 1.2900 and I was asking myself the question if it will break out or reverse.
The jobs report came out and Canadian jobs gained jumped by 79.5%. The unemployment rate fell below 6 and now it stands at 5.9%. The GDP report was also positive and it all boded well for the Canadian economy.
How did this reflect on the USDCAD?
USDCAD dropped more than 200 pips. It is a pretty phenomenal drop and it also coincided with the resistance level at 1.2900.
Pure coincidence or a price action confirmation, traders on both sides of the technical and fundamental approach are seeing the bearish implications.
What is to follow?
From here, I am seeing two possible scenarios.
Scenario 1
Price continues the fall sharply and reaches for the next support level at 1.2425.
Scenario 2
Price retraces back to around 1.2800 and then continues its fall towards the next support level.
A third scenario is also possible where price retraces back to where it fell from. Although a very likely scenario based on the economic data, it is something we should not exclude from questioning, since every scenario is as good as the next one.
What I am waiting for…
I am waiting for a retracement back to the 1.2750 area and then I will be looking for a price rejection and a bearish signal.
I believe that after such a quick drop we are bound to see at least a small correction before the bearish move is reignited.
The daily price action candle is a very strong bearish engulfing. The last 4 days of bullish candles are engulfed by a single red candle. From a weekly chart perspective, this gives us a very strong bearish rejection candle.
All in all, the negative bias is reaffirmed and this big USDCAD selloff is definitely going to have major implications in the following sessions to come.
Happy Sunday,
Colibri Trader
This material is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results.
Editors’ Picks
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GBP/USD snaps the two-day winning streak above 1.2450, eyes on US GDP data
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USD/JPY finds its highest bids since 1990, approaches 156.00
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Editors’ Picks
AUD/USD posts gain, yet dive below 0.6500 amid Aussie CPI, ahead of US GDP
The Aussie Dollar finished Wednesday’s session with decent gains of 0.15% against the US Dollar, yet it retreated from weekly highs of 0.6529, which it hit after a hotter-than-expected inflation report. As the Asian session begins, the AUD/USD trades around 0.6495.
USD/JPY finds its highest bids since 1990, approaches 156.00
USD/JPY broke into its highest chart territory since June of 1990 on Wednesday, peaking near 155.40 for the first time in 34 years as the Japanese Yen continues to tumble across the broad FX market.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.
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