This week’s focus turns to the March Canadian Dollar futures, where recent down-trend market structure has given way to a possible continuation of the sell-off in coming days. After posting a recent swing low of 88.99 on January 31st, the market has since experienced short covering off of the recent sell off. Last week, we saw consolidation off of the recent short covering. In weeks past, we have seen multiple tests, and failures, of the 20 day moving average, making this indicator a key resistance point.
As we open this week, if we see yet another failure of the 20 day moving average, traders will likely expect a sell off if the market breaches Friday’s low of 90.17. Along with a strong average directional index reading, the March Canadian Dollar could have strong downside momentum in the near term. If this scenario takes place, the likely target would be the March Canadian Dollar’s swing low of 88.99.
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