Poor CAN Data Pushing USD/CAD Towards Triangle Resistance

Poor CAN Data Pushing USD/CAD Towards Triangle Resistance

Descending Triangle: Since pushing to a high on the year just under 1.28, USD/CAD has been consolidating in February. The 4H chart below shows the pair in a descending triangle pattern, where support around 1.2380 has been holding several times, while the resistance has been declining.

USD/CAD 4H Chart 2/20
usdcad 4h chart 2/20
(click to enlarge)

CAN Retail Sales: Today (2/20), Statistics Canada reported retail sales data for December. We saw a -2.0% reading for a month on month basis in December. The forecast was around -0.3%, and the previous reading was 0.4% in November. The core reading, excluding auto, came in at -2.3% after a 0.6% reading in November. Forecasts called for a print around -0.7%. For the headline number, -2.0% was the sharpest month to month dip since December 2012, when it came in at -2.1%.

USD/CAD Reaction: On the back of Canada’s disappointing retail sales data, the USD/CAD was able to hold above the triangle support again and is now looking to test the triangle resistance around 1.26.

Bullish Continuation Scenario: A break above 1.26 can revive the uptrend and open up the 1.28 area again. In the monthly chart, we can see that USD/CAD has entered a support/resistance zone, but there is still room to rally until the 2008-2009  highs at and  just above 1.30.

Consolidation/Correction Scenario: If USD/CAD holds below 1.26, then the consolidation is still going, but only a break below 1.2380 would signal further bearish correction. Above 1.2380-1.24, the market is neutral-bullish, with emphasis on the bullish component.

USD/CAD Monthly Chart 
usdcad monthly chart 2/20
(click to enlarge)

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.