Technical Bias: Bearish
- USDCAD breaks key trendline support
- 1.2300 remains major support area
- Bearish pin bar emerges on four-hour timeframe
The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than even 12370 ahead of some key economic releases. The technical bias will remain bearish due to a Lower High in the recent wave on daily chart.
As of this writing, the pair is being traded near 1.2384. A support may be seen around 1.2350, the low of the last major dip ahead of 1.2300, the psychological number and then 1.2283, the 23.6% fib level as demonstrated in the following four-hour chart.
On the upside, the pair is expected to face a hurdle near 1.2443, the trendline support turned resistance ahead of 1.2477, the intraday high of yesterday and then 1.2500, the psychological number. The technical bias will remain bearish as long as the 1.2696 resistance area is intact.
The US Industrial Production news is scheduled for release on Wednesday. According to the average forecast of different economists the industrial production in the US remained 0.3% in January as compared to -0.1% in the month before. Generally speaking, higher industrial production is considered positive for the economy thus a better than expected actual outcome will be seen as bullish for USDCAD and vice versa.
Considering the overall technical and fundamental outlook, selling the pair on rallies appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 1.2446 resistance area.