CADUSD unable to break through key resistance level
Canadian Dollar/US Dollar (CADUSD) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
CADUSD finished Wednesday at 0.7588 gaining 4 pips (0.05%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CADUSD as at Sep 16, 2020):
Wednesday's trading range has been 42 pips (0.55%), that's slightly below the last trading month's daily average range of 48 pips. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CADUSD. Prices continued to consolidate within a tight trading range between 0.7571 and 0.7623 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish Spinning Top and the Tweezer Bottom which are both known as bullish patterns. The last time a Bullish Spinning Top showed up on Monday, CADUSD actually lost -0.08% on the following trading day.
Unable to break through the key technical resistance level at 0.7614 (R1), the forex pair closed below it after spiking up to 0.7617 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. The currency was bought again around 0.7575 after having seen lows at 0.7575, 0.7577 and 0.7571 in the last three trading sessions. Obviously there is something going on at that level.
While the pair is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 0.7623 where further buy stops might get activated. Selling could accelerate should prices move below the close-by swing low at 0.7571 where further sell stops might get triggered.
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 511 times, CADUSD closed lower 54.40% 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 53.23% with an average market move of -0.15%.