Canadian Dollar Outlook – USD/CAD Rally Looks to Be on the Horizon
USD/CAD Technical Highlights:
- USD/CAD backing-and-filling process remains constructive
- A little more patience may be needed before another run starts
Lately, USD/CAD hasn’t been a lot of fun for traders seeking a solid directional move, actually not too many currency pairs have been finding much traction. But with a little more time that could change as the backing-and-filling price action since the end of the March will eventually give way to clearer price swings.
Given the overlapping price action the downward drift smacks of a corrective move. Currently there is a good floor in place right around 13850, where two declines abruptly stopped and turned into price jumps. USD/CAD may trade back towards this support level, but as long as it holds then a low may be in place.
With the general trend off the March high tilted down there is still some risk that sellers gain the upper hand, but if they don’t then the convergence in price should lead to a breakout in the not-too-distant future. 14260 is the first hurdle to cross of significance upon a break above the March trend-line. A break above there will count as the first higher-high since the Q1 peak.
A run back to the Q1-2020/2016 highs will result in a very meaningful test as a breakout may lead to a rally back levels not seen since the early-2000s. On the flip-side, should none of the top-side thresholds mentioned above get crossed and 13850 support break with momentum, then a larger reversal may be at hand. In any event, traders will likely be best served by remaining patient for the time-being.
USD/CAD Daily Chart (wedging, 13850 floor)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.