Bulls look to US yields and the DXY continuation prospects

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  • USD/CAD bulls looking to the Jackson Hole for a boost. 
  • Technically, the price is at a critical juncture within a bullish territory. 

USD/CAD has started to confirm a bearish environment according to the previous two daily candles.

However, the following analysis illustrates the bias from both a bullish and bearish perspective. 

Daily chart

As per the chart above, the price printed a shooting star reversal candlestick pattern on 20 Aug.

This has been followed by a strong technically engulfing bearish candle on 23 Aug. 

However, it will require further confirmation that this is a valid reversal on a break of the 21-day EMA and the 1.2580/1.2600 support structure in the forthcoming sessions.

In doing so, it will then be on course for a break of the dynamic trendline supports 1&2.

1.2520 would be expected to be the last defence against an outright bearish breakout. 

With all that being said, given the broader bullish trend, bulls will be highly active above the trendline supports that would potentially lead to bearish failures and a continuation to the upside next month. 

Much will depend on the outcome of the Jackson Hole at the end of the week and the trajectory of US money markets and the US dollar.

Bulls will be looking for a monthly close above 93.50 to target 93.80 and beyond:

(DXY monthly chart)

For this to occur, it will be imperative that US 10 year yields extend beyond 1.3020% daily resistance and break ice above 1.3810% to confirm the bullish bottoming candle formations.

We have a bullish hammer printed on July 20, followed by a double bottom on Aug 4, although this was followed by a failure of a restest of old resistance structure near 1.2950/1.3030:

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