Up and down week for the loonie.
The USDCAD moved lower at the first half of the week. The bottom was reached after a weaker than expected retail sales on Wednesday. On the way there, the pair moved below a trend line on the daily chart below, moved to a new May month low, but could not get to the 38.2% target of the move up from the Feb 1 low (at 1.33473). When the price moved back into the up and down "red box" (see chart below) and back above the broken trend line, the squeeze higher was on.
The price high yesterday stalled ahead what is the ceiling area defined by swing highs. That area (see yellow are in the chart below) comes in at 1.35057 to 1.35199. The high yesterday reached 1.35018.
Catalyst for the move? Sharply lower oil prices that weakened the loonied (higher USDCAD).
The price corrected off that stall.
Drilling to the hourly chart below, the pair has moved lower as traders recognize we are still in the up and down range. We were just closer to the highs. Plus oil prices have a modest recovery
The price moved to test the 38.2% and the 200 hour MA (green line in chart below) at 1.3445. The pair did move below those levels but remained above the lower 100 hour MA at 1.3435 (blue line).
The area between the 100 hour MA below and the 200 hour MA above (between 1.3435 and 1.3445) is support, and a risk defining level for traders looking to buy the dip. A move below, should trigger stops. We have moved back above that area, tilting the bias back to the upside.
SUMMARY. The week, the sellers had their shot to go lower. They failed. That put the buyers back in control up to the ceiling area above. The correction lower has stalled ahead of support at the 100 and 200 hour MA. Staying above keeps the barometer tilted more to the upside but the fact remains, the pair is mired in an up and down area (from daily). At some point the pair will break and run, but for the time being, the range remains the same.
