Manufacturing sales and Crude oil give the CAD a lift
Manufacturing sales rose by 1.7%. Crude oil futures are up over 3.77% as well at 53.14. Both are helping to keep the CAD bid (and the USDCAD moving to new lows for the day).
The USDCAD price has moved below the lows from yesterday at 1.2439, and the low from February 9 at 1.2427.
The next downside targets become the lows seen over the last 9 trading days.
- 1.2389-1.2393 – low from February 4 and February 5.
- 1.2377 – low from February 6.
- 1.23507 - low from February 3
Risk for traders today can be mapped to the 38.2%-50% of the last leg to the downside. That area comes in at the 1.24469 to 1.2455 (see yellow area in the chart below).
Longer term for the pair, the 50% of the longer term move down from the 2002 year high to the 2007 year low comes in at 1.2626. The price has been above that level on 6 separate trading days since January 29th with only one close above the key level (see daily chart below). Yesterday, the high peaked at 1.2644 before tumbling lower. The price is continuing the move away from that key level today (see chart below).
Further lower, the 1.2315 price level is the 200 month moving average. This is another key level for the pair. The low for the month came in at 1.2350. The low price after the break above the longer term MA was at 1.2312 back on January 22. The market rewarded the break back then by taking the price to the new highs. However, the weakness now seen may look for a retest in the not too distant future.
Overall, the trend off the daily chart is still upward sloping/bullish. However, with the even longer term topside congestion at the 50% more or less holding, the market is more neutral longer term.
As a result the focus switches toward a consolidative/correction trading environment, with the shorter term charts - supplemented by the key levels off the longer term charts - becoming the focus for traders.
The hourly chart is showing more bearishness with the move away from the 100 and 200 hour MA. Can the shorter term intraday resistance from the 5 minute chart cap the upside and send the pair into the weekend with a more bearish bias? Watch the outlined levels for the clues. If topside resistance can keep the sellers in charge, next week's trading should look for a test of the 200 month MA at the 1.2315 level.
