August 20, 2018
By observing the daily technical chart we can see that earlier pair was making successively higher highs and higher lows by taking the support from an uptrend line of uptrend channel. But after arriving 1.3168 level it stopped and slipped down to 1.3066 level.Overall pair is trading in an downtrend channel where balanced demand and supply is going on.
There is a simple strategy in the if pair is trading between the channel line. At the bottom line buy and at the upper line sell. The formation of candles below the moving average line is generating bearish signal.The bearish engulfing candlestick followed by bearish marabuzo candlestick is generating bearish signal and it’s just a starting the further downfall is still expected. Odds are in favor of bears and intraday bias remains bearish on the pair as long as 1.3270 level.The way bears are reacting it seems like they are appraoching the 1.2700 level in short term.
Fundamentally the Annual CPI in Canada jumps to 3% in July and consumer confidence in the US dips to its lowest level in 11 months. Moreover, the BoC’s core-CPI rose to 1.6% to surpass the analysts’ estimate of 1.3%. The faster-than-expected growth in inflation ramped up the expectations of the BoC sticking with its hawkish monetary policy and provided a boost to the loonie.
The RSI is also favoring the bearish sentiments and a bearish divergence on RSI indicator is providing clear confirmation of trend reversal signal. On contrary the MACD indicator is not providing any sell signal till now and even it is still generating bullish crossover on the daily chart. We have mentioned in our previous report about the divergence and we got sell signal at an early stage and we were right at that time. The 1.2721 level is the key support level followed by 1.2650 level where as 1.3050 level is the key resistance level followed by 1.3150.