USD/CAD’s Long-Term Top Remains Alive And Well

USD/CAD is consolidating beneath a strong zone of resistance ahead of US retail sales and Canadian CPI data. But even if it breaks to the upside, we suspect a longer-term topping pattern is still in play, which is worth keeping an eye on over the coming weeks.

We’d like to refer to an older article from June, where we outlined a bearish case for USD/CAD against the bullish trend. Using a change of market positioning and a bearish divergence with MACD, we argued a break of the bullish trendline was favoured and that it could be carving out a topping pattern.

Indeed, we saw the breakdown soon after, but the weekly chart has printed two more lower highs in the form of bearish engulfing candles, keeping the longer-term topping pattern alive and well.

Later today we have US retail sales and Canadian CPI data, which places USD/CAD into the crosshairs of volatility. So, for our bearish bias, we’d prefer to see weak US retail and firmer Canadian CPI, but even if the reverse happens, it’s unlikely to change our bearish view of the bigger picture.

So in today’s video we highlight an important zone of resistance, which provides our bearish bias on the daily chart whilst prices remains beneath it.

Related Analysis:
USD/CAD To Challenge 'Long' Held Views?

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