Forex Video Briefing (9/29) – USD/CAD, CAD/JPY
The 1H USD/CAD chart shows a market completing a head and shoulders pattern and breaking below a rising trendline. However, we are seeing buyers in the 1.1130 area. 1.1120-1.1130 was a previous resistance area, and includes the 50-hour simple moving average. A break below 1.1120 with the 1H RSI falling below 40 would be needed to signal a bearish correction. 1.1050 will be the next a key area ahead of the GDP data and even after it. If price falls below 1.1050, it will likely clear below the 200-hour SMA and a previous support/resistance pivot. However, if price can hold above 1.1050, the bullish outlook is still in play, and the 2014-high at 1.1278 would still be in sight. A break below 1.1050 simply puts USD/CAD into a consolidation mode, with downside risk toward the 1.0950-1.10 area.
CAD/JPY is consolidating in the 1H chart. When we look at the 4H chart, we can see that it is consolidating after a bullish trend. The moving averages and the RSI suggest the market is still bullish. It should be noted that CAD/JPY is just coming off a new high on the year in September at 99.81. Also, there is room toward the 2013-high in the 101-101.05 area. Back to the 4H chart, we can see that the current consolidation around 98.00 is breaking a rising trendline from August, but it is not a bearish break, but rather a sideways one. Price is still above the 100-period SMA. After the GDP data, if CAD/JPY rises above 98.73 the bullish continuation scenario is in play with the 99.81 and 101.00 levels in sight.
A break below 97.65 clears below a recent support/resistance pivot and opens up the 96.50 level, another support/reisstance pivot and where the 200-period SMA in the 4H chart resides.