The USD/CAD barely made a new low on the year at 1.1939 during the May 6th session (the previous was around 1.1948). As we get into the May 7th session it is challenging May’s bearish continuation attempt. Let’s take a look at the charts.
The 1H chart shows USD/CAD breaking above May’s falling trendline from last week’s high around 1.2204. For this breakout to be legit, it needs to clear the 1.21 level, and take the 1H RSI to 70. The RSI should at least break above 60 to show loss of the prevailing bearish momentum. It is trying to do that as we speak.
If price holds under 1.21, look for a break below 1.2030 to open up the 1.1939 low with risk of extending lower in-line with the prevailing bearish trend seen in the 4H chart.
However, a break above 1.21 would put pressure on the 1.2204 high, which introduces a potential double bottom. So let’s monitor the USD/CAD today as it trades towards the 1.21 handle. Then watch how it pivots after tomorrow’s US NFP report.
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