USD/CAD: correctional dynamics develops 18 January 2021, 10:55

USD/CAD: correctional dynamics develops

18 January 2021, 10:55

Scenario
Timeframe	Intraday
Recommendation	BUY STOP
Entry Point	1.2805
Take Profit	1.2850
Stop Loss	1.2766
Key Levels	1.2664, 1.2700, 1.2738, 1.2766, 1.2800, 1.2850, 1.2900, 1.2950

Alternative scenario
Recommendation	SELL STOP
Entry Point	1.2760
Take Profit	1.2700
Stop Loss	1.2800
Key Levels	1.2664, 1.2700, 1.2738, 1.2766, 1.2800, 1.2850, 1.2900, 1.2950

Current trend

USD is growing against CAD today, updating local highs since January 12. Noticeable support for the instrument is provided by the growth of negative sentiments regarding the worsening epidemiological situation in the world. Despite the start of vaccination campaigns, many countries are still forced to maintain and tighten restrictive measures, which negatively affects the pace of global economic recovery. Alarming data comes from China, which has already identified the maximum number of COVID-19 infected in the past 10 months.

USD, in turn, is receiving support from the nearly USD 2T new stimulus plan for the American economy, published last week. Having parity in the Senate, Democrats can easily pass part of the amendments aimed at supporting the population. However, measures to fund vaccination programs will require Democrats to enlist the support of Republicans, which could pose some difficulties given the ongoing political tensions in the country.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing preserving a stable buy signal (located above the signal line). Stochastic, having rebounded from the level of "20", maintains a confident uptrend, signaling in favor of the development of "bullish" sentiments in the ultra-short term.

Current showings of the indicators do not contradict the further development of the uptrend in the short term.

Resistance levels: 1.2800, 1.2850, 1.2900, 1.2950.

Support levels: 1.2766, 1.2738, 1.2700, 1.2664.

Trading tips

To open long positions, one can rely on the breakout of 1.2800. Take-profit – 1.2850. Stop-loss – 1.2766. Implementation time: 1-2 days.

A rebound from 1.2800 as from resistance, followed by a breakdown of 1.2766 may become a signal for new sales with the target at 1.2700. Stop-loss – 1.2800.