CADCHF at the Cliff's Edge – Is a Breakdown Imminent?

🧭 Technical Context
Price is currently sitting at the key support area of 0.5890–0.5900, tested multiple times since April.
This week’s candlestick shows a clear close below the intermediate micro-structure (two consecutive closes under recent lows), confirming bearish pressure.
The weekly RSI remains in a neutral-to-low zone, trending downwards with no active bullish divergence.

📉 Technical Conclusion: Active bearish bias. Watch out for potential false breaks below 0.5890 as liquidity traps.

📊 COT Report – as of June 17, 2025
🇨🇦 CAD

Non-Commercials: added +8.5k long contracts, aggressively cut −18.3k shorts
→ Excessive optimism, potential exhaustion on the buy-side

Commercials: added +31k shorts
→ Typical hedge behavior – signaling protection from CAD devaluation

🇨🇭CHF

Net positions in gradual decline with no sharp moves → CHF remains in consolidation, with a defensive tone

Open Interest dropped by −19.5k → Institutional money exiting positions
→ Interpretation: Market likely preparing for a directional breakout, CHF could act as a safe haven

📉 COT Conclusion: CAD appears overbought, CHF still gathering strength. Bearish bias on CADCHF remains intact.

📅 Seasonality – June Pattern
CHF tends to strengthen in June:
+0.0095 (10Y average), +0.0068 (5Y average)

CAD shows structural weakness in June:
−0.0027 (10Y), −0.0076 (5Y)

📉 Seasonality Conclusion: June favors CAD weakness and CHF strength → Bearish confirmation for CADCHF

🧠 Retail Sentiment
92% of retail traders are long CADCHF, only 8% are short
→ Extreme imbalance = classic contrarian signal

📉 Sentiment Conclusion: Confirms potential for continued downside on CADCHF

✅ Trade Plan Summary

📌 Base scenario:
Short CADCHF if we get a daily/weekly close below 0.5890
🎯 Target 1: 0.5820
🎯 Target 2: 0.5770
🚫 Invalidation: daily close above 0.5960 (invalidates current setup)

📌 Alternative scenario:
Short from 0.5960–0.6000 if we get a bearish rejection pattern → ideal for better R/R