On Monday, information appeared about an effective vaccine for covid-19. Pfizer reported that tests carried out on the new vaccine indicate 90% effectiveness and that it does not cause side effects. This news was received by the markets in an almost euphoric way, the indexes fired up, SP500 established the maximum of all time.
Most currencies have gained up to USD. Two days have passed since this positive news and the markets are no longer so volatile, and a more detailed analysis of the impact of the vaccine on the development of the coronavirus pandemic indicates that it will take several more months.
Pfizer is able to produce 50 million vaccines this year, which is enough for 25 million people, as two doses of the vaccine need to be taken at an interval of seven days in order to gain the immunity that occurs after 28 days. The vaccine must be transported at -70C, which is an additional obstacle to its distribution and widespread access. These conditions mean that it will take a long time before the pandemic is contained.
With such an influx of news, it is difficult to analyse any instrument; subsequent fundamental events make the market move completely unpredictably.
However, while I am in favour of technical analysis, I am omitting the news which we have no influence on anyway, and today I looked at the USDCAD pair and saw the opportunity for an interesting setup.
Inside Bar appeared on the daily chart after the declines since the beginning of the month. Today’s attempts to break the top of the formation indicate a change of moods and the beginning of a growth correction.
The condition for the correction would be that the daily candle will close above 1.3050 and the MACD enters the upward phase.
If these conditions are met – there will be also bullish divergence supporting this scenario.
On the H1 chart we can roughly determine the range of the first growth impulse. This may be the closest supply zone starting at 1.3090. However, if this limit is overcome, the next target may be the level of support and resistance S/R) – 1.3260. However, until this bullish divergence on D1 starts, any scenario is possible, including further declines.
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