CADUSD stuck within tight trading range
Canadian Dollar/US Dollar (CADUSD) Technical Analysis Report for May 29, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CADUSD ended the month 1.27% higher at 0.7262 after losing 3 pips (-0.04%) today on high volume. Trading 26 pips higher after the open, CAD/USD was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (CADUSD as at May 29, 2020):
Friday's trading range has been 62 pips (0.85%), that's slightly above the last trading month's daily average range of 59 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CADUSD. Prices continued to consolidate within a tight trading range between 0.7229 and 0.7291 where it has been caught now for the last three trading days.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. The last time this happened on May 11th, CADUSD lost -0.49% on the following trading day. Additionally, five candlestick patterns are matching today's price action, the Gravestone Doji and the Northern Doji which are both known as bearish patterns and three neutral patterns, the Doji, the Long-Legged Doji and the Rickshaw-Man.
Unable to break through the key technical resistance level at 0.7282 (R1), the forex pair closed below it after spiking up to 0.7291 earlier during the day. The failure to close above the resistance could increase that levels significance going forward.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Its common bearish interpretation has been confirmed for CAD/USD. Out of 523 times, CADUSD closed lower 54.30% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 53.54% with an average market move of -0.15%.