USD/CAD Price Analysis: Bearish below monthly support with prospects for bullish correction
- Price is bound by support and resistance n the daily chart, but bearish below the monthly support.
- All eays on critical support and resistance levels on the daily chart.
Despite the downside in USD/CAD, CAD net long positions drifted lower but have held in positive territory for the past three weeks having bounced sharply in late December.
With that being said, the longer-term time frames are showing corrective price action behaviour in what could be a phase of accumulation in the makings before the next bearish drive.
The following is a top-down analysis that shows the key daily boundaries which are containing the market for the meanwhile.
Monthly chart
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It is still early days, but the monthly chart shows that should the price remain contained over the coming weeks between a narrow range, then a bullish doji would firm the bullish bias for an upside correction to resistance.
Weekly chart
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The weekly chart has printed a doji albeit with a lower close. The price is testing the resistance and a weekly close below it would be bearish. A close above would be bullish.
Daily chart
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The above chart illustrates two scenarios.
A bullish close above supporting areas in the vicinities of the 50% and 61.8% Fibonacci retracement levels and a subsequent new bullish impulse would equate to a bullish reverse head and shoulders pattern.
Prospects thereafter would be bullish on a break of the overhead resistance and onwards towards the monthly resistance overhead.
A secondary scenario is with the price breaking the supporting areas and continuing to the downside.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
