Current trend

The USD/CAD pair continues to trade within the mid-term descending channel: in the middle of this month, the price reached its lower limit around 1.3090, but could not break below it and began a corrective growth.

Today, the quotes are testing the 1.3244 mark against the background of the publication of weak Chinese data on business activity in the manufacturing sector from Caixin: the indicator adjusted from 50.5 points to 49.2 points and turned out to be in the stagnation zone, signaling a ongoing decline in industry. The continuation of this trend may increase the risks of the global economic crisis, as well as create prerequisites for a drop in demand for oil, which is a serious item of Canadian exports. Today, during the day, investors expect similar data from Canada and the USA. It is likely that the index of business activity in the Canadian manufacturing sector will grow from 48.8 points to 48.9 points, and the indicator for the USA from the Institute of Supply Management (ISM) – from 46.0 points to 46.8 points. However, both values will remain in the stagnation zone, confirming the slowdown of the industry. Also in the USA, June data on the number of open vacancies in the labor market will be published today: the indicator may decrease from 9.824M to 9.610M, which is likely to put pressure on the national currency.       

Support and resistance

Currently, the price is trying to consolidate above 1.3244 (Murray level [-1/8]) and continue to rise to the levels of 1.3330 (the upper line of the Bollinger Bands) and 1.3427 (Murray level [4/8], the upper limit of the descending channel). If the price consolidates below 1.3183 (Murray level [0/8]), the movement will be able to resume to the support zone 1.3090-1.3061 (the area of July lows, Murray level [-2/8]).

Technical indicators do not give a single signal: the Bollinger Bands are horizontal, the Stochastic has reached the overbought zone and may reverse downwards, the MACD histogram decreases in the negative zone.

Support and resistance

Resistance levels: 1.3244, 1.3330, 1.3427.

Support levels: 1.3183, 1.3090, 1.3061.

Trading tips

Short positions should be opened below 1.3183 with targets at 1.3090, 1.3061 and stop-loss in the area of 1.3230. Implementation period: 5-7 days.

Long positions can be opened above 1.3275 with targets at 1.3330, 1.3427 and stop-loss in the area of 1.3235.