BUZZ-COMMENT-This week's close could be significant for the loonie

Feb 7 (Reuters) - A turbulent week for the Canadian dollar but one that could see a deeper recovery set in despite tariff uncertainty hanging over the currency.

From a technical perspective the February 3 USD/CAD spike to 1.4792 and subsequent close at 1.4426 set the tone for a significant shift in the CAD's fortunes. The largest one-day range for USD/CAD since March 2020 and Wednesday's drop to 1.4270 has given the potential for a strong weekly reversal signal.

A bearish engulfing line has formed on the weekly candlestick chart. Engulfing lines are a two-candle pattern where the second candle's real body (shaded area between the open and close) completely engulfs the previous session's real body. In a bull trend the second candle would have a bearish real body; selling pressure has overwhelmed buying pressure.

Completion of the reversal pattern will need USD/CAD to close below last week's 1.4352 opening level. So far, the Friday session has seen USD/CAD trade a tight 1.4302-1.4326 range.

Fibonacci retracement levels taken off the 1.3420-1.4792 September to February rally provide bear targets at 1.4106 and 1.3944, 50% and 61.8%, respectively.

While tariff uncertainty grips the market and with the key U.S. labour report due out later Friday, risks remain and the CAD's current recovery could unwind quickly. However, for now the charts currently suggest further gains are possible.

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