USD/CAD is consolidating just above regime defining long-term support at 1.2062/48 as the fall in equities weighs on high beta FX. Nevertheless, economists at Credit Suisse do not expect a major correction in equities and once risk sentiment stabilizes, a weekly close below here would complete a long-term ‘double top’. Next supports are at 1.1916, with scope for an eventual move to 1.1424/1318.
A weekly close below 1.2062/48 to reinforce bearish outlook
“USD/CAD remains in a strong medium-term downtrend, which was recently reinforced by its break below major support at a corrective price low from 2018 at 1.2256/51.”
“With a major medium-term top also in place and medium-term momentum reaccelerating, we look for an eventual break below 1.2062/48, with a weekly close below here completing a multi-year ‘double top’ to dramatically reinforce our medium-term bearish outlook, with the next supports then seen at 1.1916, with little below here until 1.1424/1.1318, which is the uptrend from 2011 and 61.8% retracement of the same move.”
“Near-term resistance stays at 1.2192, before 1.2252/68, then more importantly at 1.2351/65, which we look to cap any unexpected rebounds back higher.”
