USD/CAD Trend Line Retest (April 23, 2014)

USD/CAD recently broke below a rising trend line on its 4-hour time frame, thanks to weak US non-farm payrolls data and a downbeat FOMC meeting minutes release. However, the pair is showing signs of exhaustion from the selloff and may be ready to make a quick retracement before resuming its drop.

The Fibonacci retracement levels on the 4-hour time frame line up with the broken trend line support and may act as resistance moving forward. Stochastic is moving down from the overbought zone, indicating selling momentum.

Shorting at the 50% Fib, which is close to the 1.1100 major psychological resistance with a stop above the 61.8% Fib and a target of new lows could yield a good return on risk. Moving the stop to entry once price tests the previous lows around 1.0900 could help minimize exposure.

By Kate Curtis from Trader’s Way