A pivotal day for the usdcad yesterday which saw the pair close the trading session with a wide spread down candle, breaking below the psychological 1.0100 level and ending the session at 1.0070, as the pair prepares to test parity once again.
Yesterday’s price action was the fourth consecutive wide spread down candle, initially triggered at the end of last week, and followed a sustained period of sideways consolidation the 1.0300 level which I highlighted in an earlier post.
The reason for this weakness was very clear on the daily chart with a series of shooting starts, coupled with above average volume. As mentioned earlier, yesterday’s price action was significant as it breached the potential support area at the 1.0100 level (as shown by the green dotted line). Daily volumes throughout this price waterfall have been above average, and indeed yesterday activity was higher than that of Monday’s suggesting further bearish momentum to come.
Moving to the volume at price histogram to the left hand side of the char,t there are now two areas of well defined support and resistance which stand out. The first of these is now resistance between the 1.0250 and 1.0300 area to the upside, while to the downside, which is probably more relevant at the moment, is the potential support between 0.9925 and 0.9975. This is the now the next logical place for the usdcad to test.
By Anna Coulling