On the daily chart the double-top printed during March and May is playing out well and it could potentially target 1.3380 over the coming weeks. Last week’s break of the February low of 1.3477 seems significant, although it must be said that the oscillators and futures positioning is highlighting oversold conditions. Fundamentally this is a huge week for the USD and I wouldn’t be surprised to see a further dip in early part of the week before better buying (or short covering) is seen.
On the hourly chart the key level to watch this week is the recent double-bottom at 0.9329. There is also a fairly prominent head and shoulders pattern on the hourly chart as well, with the neckline at 0.9321, so a break here would see the pair target the 0.9180 area. On the daily chart I‘ve suggested using Bollinger Bands, given the sideways move of the 20-day moving average. This seems to be playing out well, so a break of the 20-day moving average (currently at 0.9396) could see the pair target the lower band of 0.9326.
I looked at lifting stops on the recent long USD/CAD ideas to 1.0690 and would look to lift it again to 1.0715, just below Thursday’s low and the downtrend drawn from the March high. Friday’s price action was extremely positive for the potential trade idea and a move to 1.0900 could feasibly be on the cards this week.
The German equity market is looking vulnerable, with the index holding below the 20-day moving average, which in itself is moving modestly lower. A close below last week’s low of 9595 would suggest a deeper move, potentially even as low as 9129 – the lower Bollinger band on the weekly chart.