Trading the USDCAD Triangle- Weekly Opening Range in Focus

Talking Points

• USDCAD trading near highs of multi-month consolidation pattern
• Weekly opening range in focus- break to offer conviction scalp bias
• Event risk on tap from US & Canada this week

USDCAD Daily Chart

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• USDCAD in consolidation formation after breaking multi-year TL in January
• Key resistance 1.1130/57- bearish invalidation
• Breach targets objectives at 1.1223/38 & 1.1300
• Support 1.1030, 1.0970- bullish invalidation
• Broader outlook constructive above 1.0825/30
• Daily RSI challenging 50-break (bearish)
• Key Event Risk: FOMC Interest Rate Decision on Wednesday, US Existing Homes Sales on Thursday & Canadian Retail Sales & CPI on Friday

USDCAD Scalp Chart

Notes: Last month we highlighted an outside day reversal ahead of key support at 1.0905 that shifted our attention back to the topside of USDCAD. The resulting rally achieved two of our three objectives before failing at the 1.1157 target. The March open looks to have formed just below this region and while our broader outlook remains weighted to the topside, we cannot rule out at test of the multi-month consolidation pattern we’ve been in since the January high. Bullish invalidation has now been brought up to 1.0970.

The immediate focus is on the weekly opening range which we’ll define as 1.1030/40 – 1.1106 (taking into account key 6.18 ratios just below the NY low). Note that there is significant event risk on tap this week with the FOMC policy decision on Wednesday and key Canadian data prints on Friday. We’ll respect a break-out of this range heading into the end of this week while noting that a downside break of the consolidation pattern would shift our attention down towards 1.0905 and key support at 1.0825/30.

A minor trendline dating back to the monthly low gave out overnight and we’ve now rebounding off it as resistance. We seem to be carving a short-term embedded channel off last week’s high and near-term the momentum remains heavy with an RSI resistance trigger pending as a warning on short exposure. Bottom line: we favor the broader topside play but if the weekly opening range low gives out, we may have another low to make before heading higher. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

• NZDUSD Rallies Into Key Resistance on RBNZ- Bearish Below 8580
• Is an AUDUSD Top in Place? Shorts at Risk Above 8920
• Scalping the EURUSD: Breakout or Fakeout?
• GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754
• Gold Rally Vulnerable Sub $1361- March Opening Range, NFPs in Focus

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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