USD/CAD: unemployment rate will cause further decline

August 9, 2013 in Forex Analysis

USD/CAD: unemployment rate will cause further decline

1. Current trend

Time-frame of the four-hour chart clearly demonstrate the completion of the correction and continuation of the decline of quotes. Yesterday we witnessed intensive breakdown of the ascending channel, where the price corrected to the level of 50% Fibonacci. Growth in the pair was caused by yesterday’s data on a number of applications for unemployment benefits and the rise in price at the primary housing market.
Today attention should be focused on the Canadian statistics: we expect the data on a number of new houses constructions, unemployment rate and number of jobs. Analysts believe that unemployment is likely to remain at the previous level of 7.1%, while, according to experts, total number of employed people in the country will increase. The US statistics will be a crucial factor: according to experts the volume of wholesale sales may decrease; inventories of wholesale companies may increase by 0.4%. These facts will indicate overstocking in warehouses and stagnation in the industry.

2. Important levels: support and resistance

The nearest resistance level will be yesterday’s lows of the price at the level of 1.0302, next resistance level is 1.0276. Support level is 23.6% Fibonacci (1.0330).

3. Technical indicators

MACD histogram has moved to the negative zone, the signal line is directed downward, suggesting that “bearish trend will continue.

4. Trading tips

I would recommend to place short positions at the current price with the targets of 1.0276-1.0245.

Kamil Avad
Analyst of LiteForex Group of Companies

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