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In today's review of the USD/CAD pair, we will focus on examining the charts of this trading instrument. Although today is already Wednesday, that is, the middle of the trading week, I will begin my examination of the technical picture from the weekly chart. This currency pair has been ignored for quite a long time, which, in my opinion, is not quite deservedly.
Weekly
So, what do we see on the weekly scale? The pair is trading in a descending channel, which corresponds to a bearish trend for this instrument. However, do not assume that the bears on USD/CAD are so easy and simple. Not at all. First, the pair is trading in the upper section of the descending channel, and in any case favorable for the US dollar, it can go up from it. For example, on today's Fed-related events. Note that the Fed will announce its decision on the rate at 19:00 GMT, and in half an hour after that, the first press conference of the US Federal Reserve Chairman Jerome Powell will take place this year and under the new head of the White House. This is a very important event for the global financial markets in general and the foreign exchange market in particular. Given the importance of the event and the increased volatility, of which there is no doubt, USD/CAD may well break through the upper limit of the descending channel, of course, if as a result of Powell's rhetoric, the US dollar gets support and begins to enjoy strong demand from investors.
Second, pay attention to the last three outlined Doji candles, which appeared at the very end of a downward trend and clearly signal the market's reluctance to continue moving downward. It is also worth paying attention to the very strong support in the area of 1.2600, which has not let the pair lower for almost a month. Based on all of the above, it is quite reasonable to put forward the assumption that a trend change awaits the pair and is ripe for a reversal. Confirmation of the trend change for the Canadian dollar will be a true breakout of the upper border of the downward trend channel, which is also a downward trend line. A continuation of the bearish scenario will be signaled by a breakdown of the support line at 1.2588 and the closing of weekly trading below this mark.
Daily
The daily chart shows a pattern that is typical for some other major currency pairs. Namely, that factor, the pair is trading between the Tenkan and Kijun lines of the Ichimoku indicator, which represent the nearest support and resistance, respectively. I am almost sure that today the pair will break through one of these lines, especially since the driver is very suitable and very strong. I mean, first of all, the press conference of the FRS chairman, since the rates in the USA, most likely, will not change and will remain in the range of 0.00% -0.25%. However, in case of growth above the Kijun line, the bulls on USD/CAD will face no less difficult tests with the passage of 50 simple moving average upwards and the breakout of the lower border of the daily cloud of the Ichimoku indicator.
Trading recommendations for USD/CAD
Due to the peculiarities of today, it is worth considering positioning in both directions. I recommend looking for sales after a short-term rise in the pair to the area of 1.2775, while purchases look technically competent after a slight decline to the 1.2730-1.2700 price zone. Given the possible and very sharp change in market sentiment, I do not recommend setting big goals. I believe that a profit of 30-50 points will be quite appropriate.
Good luck!
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