USDCAD Surge to Watch Out For; Facebook Comeback on Tap
USDCAD 1.1500 Resistance | Ascending Trend Channel
USDCAD’s recent rally might be cut short as the pair is inching closer to testing the top of the ascending trend channel on its 4-hour chart. This lines up with the 1.1500 major psychological level, which could also hold as resistance.
If so, price could move back to the bottom of the ascending channel around the 1.1250 minor psychological level. A weak selloff might last only until the middle of the channel around 1.1350. Meanwhile, a strong move lower could mean a break of the bottom of the channel and further losses for USDCAD.
The path of least resistance is still to the upside though so Loonie bears might opt to wait for a test of the 1.1250-1.1300 area to go long. After all, jobs data from the US has been very strong while Canada’s employment change figure had a downside surprise. Yesterday, housing starts and building approvals from Canada were also weaker than expected.
An upside break of the channel resistance is also possible, especially if oil prices keep dropping. Bear in mind that the Canadian dollar is positively correlated to crude oil prices since the country is a major producer and exporter of oil.
GBPCAD Pullback Play | Resistance at 1.8000
GBPCAD recently broke below support at the 1.7900-1.8000 major psychological level and is making a retracement at the moment. The broken support zone lines up with the Fibonacci levels drawn on the latest swing high and low on the 4-hour time frame.
The event risks for this trade setup today include the release of UK manufacturing production data, which might indicate a small 0.2% increase. This would be lower than the previous month’s 0.4% uptick and reflective of a slowdown in the industry. However, a stronger than expected reading might still provide support for the pound.
A weaker than expected report, on the other hand, could mean losses for this pair since the BOE is already worried about the negative impact of external economic threats on the UK. This could mean a downturn in demand from the euro zone and weaker export activity, which then weigh on manufacturing and industrial production.
A move lower could take price down to the previous lows at 1.7600 while further gains past 1.8000 could invalidate the retracement signal. Bear in mind that Canada just released a bunch of weak reports, from its downbeat jobs data to lower than expected gains in housing starts and building approvals, which are keeping the lid on Loonie rallies.
Facebook Stock Recovery | Bounce Off $75.50/Share Support
After moving sideways for several days, Facebook stock is showing signs of a recovery. The price bounced off support at the $75.50/share level and is indicating an increase in buying momentum, based on MACD and RSI indicators on the daily time frame.
This could be a sign that the share price is in for more rallies moving forward. After all, US equities are doing well since the latest set of economic data have shown strong improvements and support Fed tightening. However, any indication that the US central bank is ready to hike rates might make borrowing costs for businesses more expensive.
A move higher could lead to a test of the previous highs around $78/share. Further gains past this mark could take Facebook stocks to the $80/share major psychological level. On the other hand, a return in selling pressure might lead to a move back to the $75/share are of interest
For now, the 50 simple moving average on the daily time frame is holding as support, just as it did so in the past. It is also currently moving above the 200 SMA, indicating that the uptrend is likely to carry on.