The USDCAD has started to correct due to weaker than expected economic data out of the U.S. as visible in this H4 chart. This currency pair has now reached the upper band of its support zone. The Golden Cross, a lacking indicator, suggest a general bullish sentiment. Having said that we believe this currency pair is due for one final bounce into its 200 DMA before starting a bigger descend which will take this pair below parity. The latest candlestick has formed a hammer formation at support and we expect a minor rally before the USDCAD forms a Death Cross.

MACD has completed a bearish centerline crossover and momentum is bearish which confirms our call for a future breakdown below parity. RSI has traded in extreme oversold territory and this currency pair needs to shake off those levels with a minor rally back into descending resistance levels in order to maintain an overall bearish trend.

We recommend a long position at 1.0110 and a take profit level of 1.0200. This will be an addition to our existing short position we took on April 11th at 1.0100. Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.0000. We will not use a stop loss level and execute this trade as recommended. The take profit level should be placed at 1.0200.

Here are the reasons why we call the USDCAD currency pair higher

• USDCAD trades at upper band of strong support zone
• Latest candlestick has formed a hammer formation at support which is a bullish sign
• Golden Cross still remains intact
• RSI is trading in extreme oversold territory and a rally above those levels is required in order to remain a bearish bias as suggested by MACD
• Profit taking

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