Pending signal:

• I am selling right here, with a stop loss of 0.58 and a target of 0.5625

I’m watching CAD/CHF after a brief rally on Wednesday, driven by a less dovish Bank of Canada. I still see this as a selling market, looking for exhaustion near resistance around 0.58 and targeting 0.56 below.

The Canadian dollar has rallied a bit during Wednesday’s session after the Bank of Canada sounded a little less likely to cut rates rapidly, which has traders looking for the Loonie to pick up strength. That being said, this is still a market where I’m looking for selling opportunities. I think the fact that we’re testing the 50-day EMA and a downtrend line creates a potential roof for price. If we can break above there, then the 0.58 level is another area I’d consider shorting.
 

Downtrend Remains Despite the Move
 

(Click on image to enlarge)

Ultimately, this remains a continued downtrend. Despite the short-term boost we’ve seen during the session, I believe it’s more likely to be a short-covering rally than the start of a trend reversal. If we can break above the 0.5850 level, then perhaps a full turnaround could develop, but for now, I’m targeting the 0.56 area, which was a recent swing low that attracted significant buying. A decisive break below that would be very negative for the Canadian dollar, and the Swiss franc would probably strengthen not only here but against other currencies as well.

I do think we’re seeing some attempts at Swiss franc weakness, but I’m not sure the Canadian dollar is the right currency to take advantage of that. With all that in mind, I’m watching for signs of exhaustion to sell into, as the downtrend remains strong and supported by longer-term fundamentals. There are still broad market questions about global risk appetite, and until we see a true shift toward risk-on sentiment, I think this pair continues to deteriorate. I’m waiting for the next opportunity to fade any rallies.

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