USDCAD Countertrend Setup (Dec 28,2016)
USDCAD is still moving inside an ascending channel on its daily time frame but is closing in on the resistance around the 1.3600 major psychological mark.
If this area keeps gains in check, price could head back to the channel support.
Stochastic is already indicating overbought conditions, which suggests that bullish momentum is exhausted and that sellers could take over as buyers book profits. RSI is still heading up so there may be some potential gains left but the oscillator is nearing the overbought region as well.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the 100 SMA is near the channel support at the 1.3250-1.3300 level, adding to its strength as a floor.
Economic reports from the US came in stronger than expected as markets reopened yesterday. The CB consumer confidence index rose from an upgraded 109.4 reading to 113.7 versus the 108.9 consensus while the Richmond manufacturing index improved from 4 to 8, outpacing the estimate at 5.
Canadian banks were still closed for the holiday yesterday and there were no reports to boost the Loonie. There are still no reports due from Canada today while the US has its pending home sales report on tap. Meanwhile, crude oil price action could influence the positively-correlated Loonie for the time being, and a bit of risk aversion in the markets is weighing on the higher-yielding currency.
By Kate Curtis from Trader's Way