USDCAD Post CPI Price Action, Feb 08

Arrow 1 marks the release of the Canadian CPI data. It also forms some significant price action. Notice how the initial push is lower but momentum on the downside fails and the move is almost completely retraced. This is significant because it shows that there is no demand for the CAD below this price.

The subsequent candlesticks fail to create a lower low and momentum builds on the upside as shorts begin to liquidate. There is a squeeze through the high of 1.0051 (market on the chart) as momentum longs begin to enter the market. This squeeze is given more power by Canadian Wholesale Sales data that came out much worse than expected at -2.9% MoM.