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USD/CAD Violates Double Bottom - Quick Trade Setup to Follow! 

EagleFX

The USD/CAD was closed at 1.3213 after placing a high of 1.3263 and a low of 1.3192. Overall the movement of the USD/CAD pair remained bullish throughout the day. After falling for four consecutive days, the USD/CAD pair rose on Friday, posted gains, and covered the previous one and half days' losses. The weaker oil prices derived the positive move of the USD/CAD pair.

The Canadian dollar was retreating across the board and trimmed a small portion of its weekly gains. Apart from weaker oil prices, it looks like the USD/CAD pair's positive move was because of the normal correction after declining for four consecutive sessions.

The data from Canada was released about the Manufacturing Sales in June that surged to 20.7% from the anticipated 16.4% and supported the Canadian dollar. However, the strong Manufacturing sales data could not limit the gains in the USD/CAD pair.

Meanwhile, the WTI Crude Oil prices declined to $41.5 per barrel on Friday and undermined the commodity-linked Loonie that ultimately pushed the USD/CAD pair on the higher side.

However, the US dollar struggled to capitalize its early gains instead of met with some recent supply at higher levels due to uncertainty over the next round of the US fiscal stimulus proposals. The greenback was also pressured by a pullback in US Treasury bond yields driven by the turnaround in the global risk sentiment.

The Friday's macroeconomic data from the US was mixed with the monthly Retail Sales report failed to impress the US dollar bulls and provided the meaningful impetus to the USD/CAD pair. The Retail Sales rose to 1.2% while it fell short of expectations of 2.0% and weighed on the US dollar.

The Core Retail Sales in July also rose to 1.9% against the forecasted 1.3% and supported the US dollar that added strength to the USD/CAD pair. The Prelim UoM Consumer Sentiment also rose to 72.8 points from the anticipated 72.0 and supported the US dollar and USD/CAD pair's upward momentum.

The traders' focus will remain on the upcoming review meeting of the US & China trade officials that has delayed by the officials as the US wanted to give more time to China to increase the purchases of the US farm products to increase the political optics of the review.


Daily Technical Levels

Support Resistance

1.3222 1.3290

1.3178 1.3316

1.3153 1.3359

Pivot point: 1.3247

The USD/CAD has violated the support level of 1.3195 level, and beneath this, the next support is expected to be found near 1.3135 level. The closing of candles below 1.3199 level can lead the commodity currency pair until 1.3129 support. Overall, the pair is trading in a bearish channel. On the 4 hour timeframe, the USD/CAD recent candle is sharply bearish, and in terms of candlestick analysis, it's known as bearish engulfing. It typically helps in the continuation of a bearish trend in the market. Thus, we can expect USD/CAD prices to drop further until 1.3135. Good luck!

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