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20 May 2015
USD/CAD needs to clear 1.22/1.2350 for a visit to 1.25 – JP Morgan
FXStreet (Edinburgh) - USD/CAD needs to overcome the 1.22/1.2350 band in order to extend the upside towards 1.25 initially, according to analysts at JP Morgan.
Key Quotes
“For the short term setup, the recent breakdown below the critical 1.2350 support zone and range lows from January March maintains the current downside risks in line with the broad USD corrective phase”.
“Moreover, the follow through below the 1.1988/33 zone (38.2% retracement from 2014) raises the risk that a new consolidation is forming below the March peak”.
“In turn, the focus has shifted to the critical 1.18/1.17 zone. This area includes the 50% retracement and uptrendline from the 2014 lows, as well as the 200-day moving average”.
“Given the current oversold setup and potential bullish momentum divergences, this area is a likely area for a retracement”.
“Note that the 1.22/1.2350 levels will now define whether a more sustained retracement to this corrective phase can develop. Above would target the 1.2500 area (76.4% retracement) which should determine whether the pair can retest the March peak”.
Key Quotes
“For the short term setup, the recent breakdown below the critical 1.2350 support zone and range lows from January March maintains the current downside risks in line with the broad USD corrective phase”.
“Moreover, the follow through below the 1.1988/33 zone (38.2% retracement from 2014) raises the risk that a new consolidation is forming below the March peak”.
“In turn, the focus has shifted to the critical 1.18/1.17 zone. This area includes the 50% retracement and uptrendline from the 2014 lows, as well as the 200-day moving average”.
“Given the current oversold setup and potential bullish momentum divergences, this area is a likely area for a retracement”.
“Note that the 1.22/1.2350 levels will now define whether a more sustained retracement to this corrective phase can develop. Above would target the 1.2500 area (76.4% retracement) which should determine whether the pair can retest the March peak”.