CADUSD dominated by bulls lifting the market higher throughout the day
Canadian Dollar/US Dollar (CADUSD) Technical Analysis Report for Jul 08, 2020 | by Techniquant Editorial Team
CADUSD finished Wednesday at 0.7400 gaining 49 pips (0.67%). Today's close at 0.7400 marks the highest recorded closing price since June 10th. The bulls were in full control today, moving the market higher throughout the whole session. Closing above Tuesday's high at 0.7394, CAD/USD confirmed its breakout through the prior session high after trading up to 17 pips above it intraday.
Daily Candlestick Chart (CADUSD as at Jul 08, 2020):
Wednesday's trading range has been 71 pips (0.97%), that's above the last trading month's daily average range of 53 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently significantly lower than usual for CADUSD.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. Despite a weak opening the forex pair managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
The pair managed to close back above the 20-day moving average at 0.7360. Unable to break through the key technical resistance level at 0.7405 (R1), the FX pair closed below it after spiking up to 0.7411 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. When prices bounced off a significant resistance level the last time on June 23rd, CADUSD lost -0.64% on the following trading day.
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 OHLC Patterns based market condition "Bullish Outside Bar" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for CAD/USD. Out of 131 times, CADUSD closed lower 53.44% 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 57.25% with an average market move of -0.25%.