Time Zone: GMT +3
Time Frame: 4 Hours (H4)
Fundamental Analysis:
The USDCAD currency pair is influenced today by significant economic data releases from Canada. The Canadian Employment Change report shows an increase of 26.9K jobs, which is higher than anticipated, signaling a strengthening labor market. Concurrently, the Canadian Unemployment Rate is reported at 6.5%. These figures indicate a robust economic environment in Canada, which could bolster the CAD against the USD. Traders will likely monitor these figures closely, as they could lead to increased volatility in the USDCAD pair. On the US side, no major data releases are expected, leaving the CAD’s strength as the primary driver for today’s market moves.
Price Action:
On the H4 timeframe, USDCAD is currently exhibiting bearish momentum, following a breakdown from an ascending channel. The USDCAD price has moved lower after reaching a peak around 1.3938, and it is now hovering between the 50% and 61.8% Fibonacci retracement levels. The formation of lower highs and lower lows within the descending channel suggests continued bearish pressure. The recent candles show consolidation, indicating a potential pause or retracement before the next directional move.
Key Technical Indicators:
Alligator Indicator (Lips – Green, Teeth – Red, Jaws – Blue): The Alligator indicator shows the Lips below the Teeth and the Teeth below the Jaws, confirming the bearish trend. The widening of these lines further supports the continuation of the downtrend, with the current price action adhering closely to this structure.
MACD (Moving Average Convergence Divergence): The MACD histogram is below the zero line, and the MACD line is slightly below the signal line, indicating bearish momentum. The declining histogram bars suggest weakening bearish strength, which could indicate a potential for short-term consolidation or a minor bullish retracement.
%R (Williams %R): The %R is currently near the oversold region at -68.96. This suggests that the pair is approaching an area where a bullish correction might occur, although the strong downtrend could limit any significant upside movement.
Parabolic SAR (Stop and Reverse): The Parabolic SAR has recently placed dots below the candles, indicating a potential shift in momentum. However, given the prevailing downtrend and the positioning of other indicators, this could be a short-lived retracement unless supported by stronger buying pressure.
Support and Resistance:
Support: Immediate support is seen at the 1.3700 level, which aligns closely with the 61.8% Fibonacci retracement. A break below this could see the price moving towards the next significant support at 1.3600.
Resistance: The nearest resistance is at 1.3775, aligning with the 50% Fibonacci retracement. A move above this level might encounter further resistance at 1.3830.
Conclusion and Consideration:
The USDCAD pair on the H4 chart currently reflects a bearish outlook, with strong downtrend indicators and critical price levels being tested. Traders should closely watch the 61.8% Fibonacci retracement level for potential price reactions. The Canadian employment data suggests underlying strength in the CAD, which could continue to weigh on the pair. However, the potential for a minor bullish correction exists if the pair finds support at current levels.
Disclaimer: The provided analysis for USDCAD is for informational purposes only and does not constitute financial advice. Market conditions can change rapidly, and it is essential for traders to conduct their own research before making trading decisions. Consideration should be given to the potential risks involved in trading financial instruments.
