Two trades to watch: FTSE, USD/CAD

FTSE look towards 7000 watch for overbought conditions. USD/CAD eyes Canadian labour market data.

Charts (4)

FTSE looks to 7000, watch for overbought conditions 

The FTSE has outperformed its peers across the week, rallying over 3% whilst in comparison the German Dax is looking a just 0.6% gains so far this week. 

The strong vaccine rollout programme falling covid numbers and reopening of the UK economy on Monday mean the economic outlook for the UK has improved considerably. The more domestically focused FTSE 250 trades at an all-time high. 

Today Transport Secretary Grant Shapps will confirm a traffic light system for re-starting travel later today putting travel stocks in focus. 

Where next for the FTSE? 

After breaking out above 6810/5 earlier in the week the FTSE has surged higher hitting a 13 month high in the previous session.  

The prices trades comfortable above its 50 & 100 sma on the 4 hour chart and above its ascending trendline dating back to March 24 indicating an established bullish trend. The trend which has steepened in recent sessions. 

The RSI is in overbought territory, so a pull back is on the cards before further gains. 

Immediate resistance can be seen as 6965 the overnight high. A break above here could bring 7100 into the picture and 7140 October 2019 low. 

On the downside support can be seen at around 6910 January high. The bears should wait for a move below strong support at 6815 the confluence of the 50 EMA, January’s high and the ascending trendline support.   

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USD/CAD eyes Canadian labour market report 

The US Dollar is looking past a dovish Fed and has staged a rebound on Friday, the DXY trades +0.15% higher. 

Oil markets have done little to influence the loonie or move the pair. 

Attention is on the monthly Canadian employment report for March which is expected to reveal a slight dip in unemployment to 8%, from 8.2% whilst a 100k net change in employment is forecast. 

The data comes after Ivey figures revealed that the manufacturing PMI rose to 70 in March, making it one of the top performing countries. 

Where next for USD/CAD? 

USD/CAD has traded relatively rangebound since the end of March. The pair has broadly traded within a horizontal channel capped by an upper band at 1.2650 and a lower band at 12550. 

USD/CAD formed a double top pattern on the 4 hour chart and fell to a low of 1.2555 overnight, before rebounding higher and pushing back above the flat 50 & 100 EMA.  

The RSI has picked up and is back in bullish territory and pointing higher. 

However bulls may wish to wait for a move above 1.2650 before placing any aggressive buy positions, which could open the door to 1.27.  

Meanwhile a disappointing labour market reports could see a breakout move below 1.2550 bringing 1.25 April’s low into focus. 

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