USD/CAD: Weekly Discussion for the Week of Feb. 16-20

The USD/CAD has been trading lower over the last several sessions, and is now getting to an interesting technical point for us. Breaking down the different time-frames (1D, 4H, 1H) we can see that on the daily the pair has been in a clear bull-trend which at this point in time remains intact. We're currently in a corrective sideways movement, which suggests that another impulsive leg up is probable. Looking at the 4H, our main point of interest is the wicks on the hammer candles that formed, these coincide with our supportive level on the daily (1.23900-1.23500) but also are a likely point of liquidity for the institutions to reverse the market back upwards after taking out stop under these hammers. Looking at the 1H chart, we can see we're in a slightly ascending channel, and we're currently on our way to re-attack the lows, in our view this is a good situation to take a contrarian view of a channel breakdown, and instead of looking to play the breakout actually look to fade it in tune with the bigger trend on the pair.