Back
18 Apr 2014
Short term setup has improved for CAD - JPMorgan
FXStreet (Bali) - JP Morgan FX Strategists note that USD/CAD is at risk of a more pronounced downward correction after the sharp bearish shift.
Key Quotes
"In line with renewed bearish price action for the USD over the past several weeks, the decline for USD/CAD from the March high raises the risk that a more protracted corrective phase can develop."
"The impulsive decline after failing to sustain the break above the important 1.1200/35 resistance suggests a bearish character shift."
"Again, the key 1.12 zone includes the 50% retracement of the decline from the 2009 cycle peak and will continue to define whether the medium term uptrend is back on track."
"The very short term setup can allow for some pause/retracement given the proximity to the next line of key support levels and the current oversold framework. In this regard, the 1.0860 support area is important as it represents the 38.2% retracement of the rally from the September low. Violations would suggest a higher risk of a deeper corrective phase into the 1.0740/1.0645 zone."
"Importantly, this area includes the January breakout zone, the trendline support from the October low, as well as the 200-day moving average."
"While the short term setup has improved for CAD, the medium term bearish risks have not been eliminated. In this regard, a violation of the 1.0660/00 multi-year breakout zone from November would imply a more sustained shift is underway."
Key Quotes
"In line with renewed bearish price action for the USD over the past several weeks, the decline for USD/CAD from the March high raises the risk that a more protracted corrective phase can develop."
"The impulsive decline after failing to sustain the break above the important 1.1200/35 resistance suggests a bearish character shift."
"Again, the key 1.12 zone includes the 50% retracement of the decline from the 2009 cycle peak and will continue to define whether the medium term uptrend is back on track."
"The very short term setup can allow for some pause/retracement given the proximity to the next line of key support levels and the current oversold framework. In this regard, the 1.0860 support area is important as it represents the 38.2% retracement of the rally from the September low. Violations would suggest a higher risk of a deeper corrective phase into the 1.0740/1.0645 zone."
"Importantly, this area includes the January breakout zone, the trendline support from the October low, as well as the 200-day moving average."
"While the short term setup has improved for CAD, the medium term bearish risks have not been eliminated. In this regard, a violation of the 1.0660/00 multi-year breakout zone from November would imply a more sustained shift is underway."