USD/CAD has been come under steady downside pressure since failing at the start of the month from just under the 1.0600 6th square root progression of the May low. The broader uptrend remains higher, however, and with the decline over the past few weeks unfolding in a seemingly corrective fashion we like using the cyclical turn window seen over the next couple of days as an opportunity to re-align ourselves with this longer-term uptrend.
With the pair nearing some key support levels we will be looking for a positive reaction around these supports to signal that the uptrend is indeed trying to resume. The levels that we will be paying especially close attention to include: the 78.6% retracement of the June to July advance at 1.0235, the 4th square root progression of the year-to-date high at 1.0195 and Fibonacci measured moves at 1.0170 and 1.0155. We like scaling in against these levels over the next couple of days. Too much weakness below 1.0155 will make us seriously question the positive cyclicality we see developing in the exchange rate.
USD/CAD Daily Chart: July 29, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Event Risk Over Coming Sessions:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: 1.0310 (Fibonacci), 1.0370 (Fibonacci)
Support: 1.0235 (Fibonacci) 1.0195 (Gann)
STRATEGY – Buy USD/CAD at 1.0235
Stop: Daily close below 1.0155
Target 1: 1.0370
Target 2: 1.0435
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com