Two trades to watch: FTSE, USD/CAD
Fiona Cincotta April 20, 2021 3:00 PM
FTSE lags behind peers as GBP/USD strengthens after solid jobs data. USD/CAD needs to break below 1.2475 for further declines.
FTSE lags peers as GBP gains post jobs data
The FTSE had a strong previous week gaining over 1.7% and it pushed over 7000 for the first time since the start of the pandemic.
GBP/USD strength mean the FTSE lags versus its peers.
UK unemployment figures beat forecasts unexpectedly dropping to 4.9%, down from 5% and beating forecasts of 5.1%. The claimant count came in at a much better than expected 10.1k in March versus 86.6k in February and 24.5k forecast.
Where next for the FTSE?
The FTSE continues to trade within the broad ascending channel dating back to November. It trades above its upward sloping 20 & 50 EMA on the daily chart.
The RSI looks a little over extended but a buy the dips attitude could continue to be a driver today.
Today its all about the 7000 level. This is a round figure which is attracting a lot of attention.
The recent breakout came from 6800, which has now turned into a strong level of support and could support a move eventually towards 7130 resistance and on to 7200.
Any break below 6800 brings the 50 EMA at 6760 into play and 6630 the lower band of the ascending channel.
USD/CAD needs to clear below 1.2475 for further declines.
The USD is on the back foot for a second straight session although the market mood remains calm.
Oil prices are charging higher offering support to the loonie. After 6% gains last week WTI is up an additional 1.6% this week.
API crude inventory data is due later today.
Where next for USD/CAD ?
USD/CAD has slipped below 1.25 heading towards the European open. It is approaching a key support to complete a rounding top bearish pattern in the 4 hour chart.
After rebounding off two month support, the pair failed to break above its 50 sma and the upper band of the descending channel adding to the bearish picture. The RSI is also supportive of further downside.
However, the pairs needs to break through the two month support at 1.2470 to complete the bearish formation and extended the selloff towards the March low of 1.2365.
Any recovery will need to break meaningfully above 1.2535 the confluence of the 50 EMA and the upper band of the ascending trendline. Beyond here the buyers could target 1.26 ahead of 1.2650, the March high.
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