Canadian Dollar Price Forecast: USD/CAD Pullback from Key Resistance
Canadian Dollar Talking Points:
- The Canadian Dollar has fallen so far in November as USD/CAD has clawed back a large portion of October’s losses.
- USD/CAD reacted at a key area of resistance on Friday, setting the stage for short-term bullish momentum and intermediate-term bearish swings.
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USD/CAD November Bounce Runs into Resistance
After a really strong start to the month of November, USD/CAD has run into some resistance that’s tempered the topside advance. The big question at this point is whether this turns into something more, as a deeper reversal in the US Dollar may help to bring back the bearish trend in USD/CAD that ran so visibly in the final three weeks of October and, perhaps more attractively, during June and July as the pair fell by five big figures with FOMC rate cut bets getting priced-in.
USD/CAD Daily Price Chart
USD/CAD: 1.3000 Hasn’t Been Tested in a Year, Looms Large
Taking a step back on the USD/CAD chart and longer-term price action remains in a digestive state. The symmetrical wedge pattern that’s been building since early-2018 has helped to hold both 2019 highs and lows. On the support side of the matter, it’s the 1.3000 price that appears so important, as buyers came in ahead of a 1.3000 test in mid-July and again in late-October, giving the appearance that sellers didn’t yet want to encounter a test below the big figure. But, now that prices have bounced and ran into resistance, might the door be opening to another short-side run in the pair?
USD/CAD Weekly Price Chart
USD/CAD Strategy Moving Forward
At this point, the November bullish move could remain workable for short-term strategies. On a longer-term basis, however, the more attractive side of the matter would likely be on the short-side given this resistance test combined with the prior prevailing trend inside of that longer-term case of digestion.
On the shorter-term look, that resistance coming into play has helped to elicit a 23.6% retracement in the pair, at which point buyers came in to offer support. This can keep the door open to short-term bullish momentum, looking for a re-test of the 1.3262 resistance level.
USD/CAD Four-Hour Price Chart
On an intermediate-term basis, as noted above, the more attractive side would likely be short given proximity to longer-term support and resistance combined with the resistance reaction that showed at a key area on the chart on Friday. This approach would be looking for a return of the bearish momentum that showed so prominently in October, initially targeting the 1.3168 area on the chart, after which secondary targets could cast towards 1.3130 followed by 1.3100.
USD/CAD Eight-Hour Price Chart
To read more:
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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.