- USD/CAD risks further losses heading into BoC
- Broader focus remains lower sub-1.3254
- Updated targets & invalidation levels
Chart Created Using TradingView
Technical Outlook : Heading into the Bank of Canada (BoC) interest rate decision tomorrow the Loonie looks poised for further gains with the USDCAD holding within the confines of a descending pitchfork formation extending off the September & October highs. Note that we've been marking strong bearish divergence in daily momentum for some time now with the exchange rate posting an outside-day reversal off the monthly highs last week. An objective break below the monthly open yesterday shifts the focus lower with the median-line extending off the 9/14 high catching the decline earlier today.
The BoC is expected to retain its current policy in October as the central bank leans on fiscal authorities to boost economic activity. From a trading standpoint, heading into the release we'll favor selling rallies while below immediate resistance at 1.3140/48 with our broader bearish invalidation level up at 1.3254 . A break lower eyes subsequent support targets at 1.3025/29 , 1.2987 & the highlighted median-line confluence at ~ 1.2950 . For the complete setup and to continue tracking this trade & more throughout the week- Subscribe to SB Trade Desk .
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long USDCAD - the ratio stands at +1.15 ( 53 % of traders are long)- weak bearish reading
- Long positions are 37.6 % above levels seen last week while short positions are 16.87% lower over the same time period.
- Open interest is 4.9% below its monthly average
- The retail crowd shifted to net long on October 14 th as the pair was in the midst of posting an outside-day reversal off the monthly highs. Current positioning suggests the near-term risk remains weighted to the downside.
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---Written by Michael Boutros, Currency Strategist with DailyFX
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