CADUSD finds buyers at key support level
Canadian Dollar/US Dollar (CADUSD) Technical Analysis Report for Jun 29, 2020 | by Techniquant Editorial Team
CADUSD ended Monday at 0.7320 gaining 15 pips (0.21%) on low volume. Trading up to 14 pips lower after the open, the currency managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (CADUSD as at Jun 29, 2020):
Monday's trading range has been 30 pips (0.41%), that's far below the last trading month's daily average range of 58 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently notably lower than usual for CADUSD. Prices continued to consolidate within a tight trading range between 0.7291 and 0.7349 where it has been caught now for the last three trading days.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving lower in the previous session, the FX pair managed to close higher but below the prior day's open, forming a bullish Harami Candle.
After trading down to 0.7297 earlier during the day, CAD/USD bounced off the key technical support level at 0.7307 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on May 25th, CADUSD gained 1.51% on the following trading day. After having been unable to move lower than 0.7291 in the previous session, the pair found buyers again around the same price level today at 0.7297.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling could speed up should prices move below the nearby swing low at 0.7291 where further sell stops might get activated. As prices are trading close to June's low at 0.7245, downside momentum could accelerate should the forex pair mark new lows for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for CAD/USD. Out of 424 times, CADUSD closed lower 52.59% 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 56.84% with an average market move of -0.26%.