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Canadian Dollar Price Outlook: USDCAD Retrace to Key Chart Resistance

Canadian Dollar Price Outlook: USDCAD Retrace to Key Chart Resistance

2019-06-14 13:30:00
James Stanley, Currency Strategist
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Canadian Dollar Talking Points:

  • USDCAD had a brutal week to kick-off June, but a big area of support came into play around the two-month lows that’s since held sellers at bay.
  • USDCAD has posed a relatively mild bounce so far this week of less than 100 pips, but just ahead on the chart is a big zone of prior support that could soon come into play as resistance.
  • This week’s FX Setups looked at the long side of USDCAD, looking for a bounce from support; but now that prices have pushed up towards a key area of chart resistance, that stance may soon be ready to flip to the short-side.

USDCAD Recovery Rally Pushes Towards Resistance

Last week was a brutal outing for USDCAD. After the pair had flickered up to a fresh five-month-high the week before, finding a bit of resistance at a key level on the chart, sellers came in, with aggression, to push prices all the way down to the late-March swing-lows. This takes place around the 1.3250 area, and after a small gap-lower to start this week’s trade, buyers held on and have continued to push, further retracing a portion of last week’s sell-off.

USDCAD Two-Hour Price Chart

usdcad usd cad two hour price chart

Chart prepared by James Stanley

As you can see on the above chart, a bit of resistance is showing up on the under-side of a trend-line projection; and this was a key component to the longer-term setup in USDCAD until it was violated after the June open. This trend-line was the support side of a longer-term symmetrical wedge pattern that was brewing for the past couple of years, with the resistance side of that formation setting-up since May of 2017. This can keep the door open for longer-term bearish themes, particularly for those looking at a bigger-picture short thesis around the US Dollar.

USDCAD Weekly Price Chart

usdcad usd cad weekly price chart

Chart prepared by James Stanley

USDCAD Strategy Moving Forward

While this week’s bounce has shown decent consistency, even keeping the door open for short-term bullish trend scenarios in the early-portion of this week, as looked at on Tuesday, the longer-term setup here may be more conducive for short-side themes. This bounce has been rather mild in consideration of the prior-week sell-off, and prices haven’t yet encountered the 38.2% Fibonacci retracement of that prior move. But – that retracement level, as well as the 50% marker come-in around a very interesting spot on the chart, and this incorporates the longer-term area of prior support that runs from 1.3361-1.3385.

That zone was usable for support as the USDCAD bullish trend was holding on; but now that that trend has shown signs of further breakdown potential, it can be re-utilized for lower-high resistance potential.

USDCAD Four-Hour Price Chart

usdcad usd cad four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

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--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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