A closer look at price action on the H4 timeframe shows that the USD/CAD experienced heavy selling pressure in the later hours of US trading on Thursday, following hawkish comments from BoC Gov . Poloz. After striking a low of 1.2713, the couple managed to recover relatively quickly and rejoin the 1.28 handle into the closing bell.
Should H4 price remain sub 1.28 today, this could be a sign that further selling is on the cards. Let’s keep in mind here that daily price shows room to move as far south as daily support coming in at 1.2598 (merges with a 61.8% daily Fib support at 1.2618). Nevertheless, before the bears can move into second gear, the weekly buyers will need to be taken out around 1.2778! As such, why not consider waiting for a H4 close below the weekly support to take shape, before considering a sell. That way, the path south is likely going to be relatively free down to at least 1.27, and quite possibly beyond.
Data points to consider: US empire state manufacturing index at 1.30pm; US industrial production m/m and capacity utilization rate at 2.15pm; CAD manufacturing sales m/m at 1.30pm GMT .