On Tuesday, the CAD significantly strengthened against the USD amid growing oil prices. The pair, however, still remains near its record highs and therefore it is too early to talk about the trend reversal.
In addition to growing commodities prices, the pair strengthens prior to the Bank of Canada meeting that is due today. According to experts, the regulator is going to leave its interest rate at the current 0.5% level as the world stock markets conditions are improving, while low oil prices are already incorporated in the future budget.
Support and resistance
Bollinger Bands on the daily chart is turning horizontally, while the price range is narrowing down. MACD continues moving down. Stochastic approached the overbought zone and turned down.
The indicators recommend keeping existing short positions, but wait for a clearer signal before opening new ones.
Support levels: 1.3156, 1.3100 (the bottom border of the channel), 1.3053, 1.3000 (psychologically important level), 1.2951 (12 August low).
Resistance levels: 1.3212 (local high), 1.3260, 1.3300 (7, 8 September highs), 1.3352 (25 August high).
Long positions can be opened after the price rebound from the level of 1.3156 (with the appropriate indicators signals) with the target at 1.3300 and stop-loss at 1.3100.
Short positions can be opened after the breakdown of the level of 1.3156 with targets at 1.3100, 1.3050 and stop-loss at 1.3200, 1.3250.