With the BOC decision and Canadian jobs data coming up, I’m looking at this textbook setup on a Loonie pair this week.
While the Canadian dollar is enjoying some bullish action thanks to rising oil prices after the OPEC decision, buyers might retreat as the top-tier events draw near.
After all, the BOC is widely expected to sit on its hands again while the employment report could print a slower increase in hiring for May.
Do you think USD/CAD is due for a bounce off this support area soon?
USD/CAD 4-hour Forex Chart by TV
As you can see from the 4-hour chart above, this forex pair has been pacing back and forth between support around the 1.3315 level and resistance at the 1.3650 minor psychological mark.
Price is closing in on the range support at the moment, and technical indicators are hinting that another bounce is due.
For one, Stochastic is already reflecting oversold conditions or exhaustion among sellers, so turning higher would confirm a return in bullish vibes.
At the same time, the 100 SMA is still above the 200 SMA to suggest that the path of least resistance is to the upside or that support is more likely to hold than to break.
A cautious BOC statement and/or a downbeat Canadian jobs report might be enough to encourage Loonie bears to come out, possibly triggering a rally back up to the top of the range or at least until the area of interest at the middle.
A breakdown, on the other hand, could spur a downtrend that’s at least the same height as the rectangle pattern so stay on the lookout for big bearish candlesticks, too!
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