USD/CAD increasingly looks as though it is in the process of forming the “right shoulder” to a very large “head and shoulders” top. Therefore, analysts at Credit Suisse maintain a bearish bias, with support at 1.2994. On the flip side, resistance stays at 1.3259/60.
Key quotes
“USD/CAD ended up posting a small, potentially bullish ‘hammer’ candlestick yesterday to close back above the important October low at 1.3100/3099. Nevertheless, we stay directly bearish and look for a closing break below here in due course, which would open the door for a fall back to 1.3047/45, removal of which would trigger a move to the ‘neckline’ to the potential very large ‘head and shoulders’ top and 2020 low at 1.3004/2994.”
“Below the 1.2994 2020 low would trigger the pattern to open the door to significantly lower levels over the medium term, with 1.2952 just the initial next support.”
“Resistance moves to 1.3178, then 1.3204. Only a move above 1.3259/66 would turn the risks back higher within the range though.”
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