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Canadian Dollar Price Forecast: USD/CAD Spikes, Pulls Back - Loonie Levels

Canadian Dollar Price Forecast: USD/CAD Spikes, Pulls Back - Loonie Levels

James Stanley, Senior Strategist

Canadian Dollar, CAD, USD/CAD Talking Points:

  • USD/CAD spiked to start the week, setting a fresh September high at 1.2986.
  • That spike has since pulled back but as looked at in the Analyst Pick around the US Dollar, USD/CAD can remain attractive for bullish USD strategies.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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The week has started with a bang for USD/CAD, as the pair pushed up to another fresh September high shortly after this week’s open.

Going back to last week, the pair had spent about eight days coiling into a symmetrical wedge pattern. But that wedge had built atop a big zone of longer-term support; and as the US Dollar caught a bid on Friday, USD/CAD broke out, as well, jumping up for a test of the prior September high around 1.2762.

That breakout continued through the weekly open as a sense of risk aversion has filtered into global markets. Prices in USD/CAD broke above the 1.2800 level on the way to setting a fresh September high at 1.2896.

To learn more about the symmetrical wedge pattern, check out DailyFX Education

USD/CAD Four-Hour Price Chart

usdcad four hour price chart

Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD Support Potential

As I had discussed in the recent Analyst Pick, USD/CAD can remain attractive for scenarios of USD-strength. And with this week bringing a widely-watched Federal Reserve rate decision into the mix, that will likely be the big driver across global markets as the world waits to see if the Fed is going to begin tapering asset purchases or whether they’ll wait. Of course, this is coupled with the Evergrande scenario as risk items for traders to keep a tab on.

In USD/CAD, for traders looking at bullish USD scenarios going into that FOMC rate decision, support potential exists at prior points of resistance, the first level of which is already in-play off of the 1.2800 handle. A little lower, at 1.2762, is another prior swing-high that remains as support potential, and another such level exists down at 1.2695.

If those three levels are taken-out, there’s one more major spot of support and it’s the topside of the longer-term zone, plotted around Fibonacci levels at 1.2621 and 1.2632: This was the same zone that helped to set support before last week’s breakout from the symmetrical wedge formation.

To learn more about Fibonacci, check out DailyFX Education

USD/CAD Two-Hour Price Chart

USDCAD two hour price chart

Chart prepared by James Stanley; USDCAD on Tradingview

--- Written by James Stanley, SeniorStrategist 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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