USD/CAD: downward trend 21 January 2021, 10:59

USD/CAD: downward trend

21 January 2021, 10:59

Scenario
Timeframe	Weekly
Recommendation	SELL STOP
Entry Point	1.2580
Take Profit	1.2420
Stop Loss	1.2640
Key Levels	1.2420, 1.2580, 1.2670, 1.2810

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.2670
Take Profit	1.2810
Stop Loss	1.2600
Key Levels	1.2420, 1.2580, 1.2670, 1.2810

Current trend

The pair is showing a downtrend, trading at 1.2614.

USD began to decline again. Investors were rather lukewarm about the official entry of Joe Biden into the office of US President. In turn, Janet Yellen's speech as the new finance minister is expected to take place this week and investors have high hopes about it. It is also not completely clear when the real discussions will begin on the new package of measures to support the American economy for USD 1.9 trillion, proposed by Biden.

CAD continues to trade confidently against USD, despite rather weak macroeconomic statistics. Canada's Core CPI fell by 0.4% in December after rising by 0.2% in November, while the CPI declined by 0.2% after rising by 0.1% a month earlier. Among the negative factors for CAD there is one of the first decrees by Joe Biden to halt the construction of the Keystone XL oil pipeline, which was actively supported by the Canadian authorities.

Support and resistance

On the local chart, the price continues to trade within the descending channel and after reaching the support line has a high chance of continuing to decline. Technical indicators have already issued a sell signal. The fast Alligator indicator EMAs crossed the signal line from above, and the histogram of the AO oscillator moved to the negative area.

Resistance levels: 1.2670, 1.2810.

Support levels: 1.2580, 1.2420.

Trading tips

If the asset continues declining, and the price consolidates below the local support level at 1.2580, short positions can be opened with the target at 1.2420. Stop-loss – 1.2640. Implementation time: 7 days and more.

If the asset reverses and continues growing, and the price consolidates above the local resistance level at 1.2670, long positions will be relevant with target at 1.2810. Stop-loss – 1.2600.