USDCAD Hits Downside Confluence Target After Bearish Price Action– Correction Underway
- Our last update for the USDCAD (13th July) came as the Loonie was trading around 1.0170. Price had just formed a bearish pinbar candle, after piercing the 20 period SMA; however, our primary focus was the fact that currency correlation relative strength (see our linked tutorial to see how we look for the strongest versus weakest currencies) was showing major CAD strength on the 4 hour charts.
- A combination of price action analysis and the CAD showing significant strength (along with other commodity currencies) has us looking for USD/CAD downside.
- We highlighted the downside confluence area of 100 SMA, combined with FE100, and the significant previous resistance level which could subsequently become support, as being a key trouble area for any move lower. This setup worked out well as the Loonie did move lower and bounce of this downside support area after hitting it to the pip!
- Price subsequently moved around 60 pips higher after hitting this confluence level.
- Some of the broker price feeds are showing a bullish engulfing candle from the support level. This is indicating the potential for further corrective movement to the upside.
USDCAD Daily Chart