Support Targets for the USD/CAD Intraday Downtrend
The surprise EIA release of a larger-than-expected drawdown in crude supplies helped crude oil futures regain most of the early morning’s early losses. I feel this is particularly important for traders of the USD/CAD whereby the price of crude can influence the strength or weakness of the loonie (the Canadian Dollar) significantly. The crude oil recovery allowed the loonie to strengthen. Since the overall direction on the daily time frame is in a distribution market cycle, the price action is trading within a wide and volatile range. I believe this makes the intraday set ups a better choice to manage the shorter up and downtrend in the pair.
The direction on the 60-minute time frame of the USD/CAD has been predominantly down until the recent consolidation between 1.0341 and 1.0304. The pair became “sandwiched” intraday between the “00” and “50” major psychological levels. This caused the downtrend to lose much of its prior momentum. Regardless, I believe the PRS alert of the Falling Wedge is well suited to define the narrowing range as the volatility drops and may show opportunities on either the reversal of the pattern (and potentially the trend) or a continuation lower.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
If the USD/CAD can trade lower through support at the 1.0260 level (which is the support line of the Falling Wedge), I will look for more follow-through as the loonie gains on the U.S. Dollar. I also feel it’s important that the selling pressure at the top line of the pattern (currently at 1.0325) holds and prevents the pair from making a higher high. While the lower highs keep the selling pressure on the pair, I believe it’s the lower lows that maintain and even strengthen the bearish sentiment.
In my experience, identifying where downside support may be waiting – if the pattern breaks down – may be accomplished by looking at some of the near term lows as well as the Forecast region from previous patterns that have already broken down on the 60-minute time frame.
*Results are not guaranteed, individual experiences may vary. Past performance is not indicative of future results
The 60-minute chart had previously broken down lower (early in the Tuesday session) when prices traded lower through 1.0400. Once the Triangle broke, the PRS platform projected where potential downside support would be waiting. I believe most traders would consider this a profit target area for a short position.
The PRS Forecast is plotting between 1.0340 and 1.0240 and the USD/CAD has already entered the area. Notice how the top of the Forecast range (what was previously support) has now become resistance. The lower end of the range puts future support at 1.0240. Today’s session low is currently 1.0267 and it appears that the bears have managed to break the major psychological level support at 1.0300.
For the downtrend on the 60-minute chart to follow-through lower, I see that the 1.0300 needs to provide selling resistance and the bottom line of the Falling Wedge needs to be pierced to create that negative sentiment that will accompany a lower low.
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