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USD/CAD Technical Forecast: Pullback in Danger of Becoming a Reversal

USD/CAD Technical Forecast: Pullback in Danger of Becoming a Reversal

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CAD Technical Outlook

  • USD/CAD’s sizable pullback brings into question the upside
  • The coming days could be important to the next few weeks

USD/CAD Technical Forecast: Pullback in Danger of Becoming a Reversal

USD/CAD rallied fiercely post June Fed meeting, but since then it has run aground and retreated. Some backing-and-filling was expected even if higher prices were to come. But the size of the retracement is a bit concerning and we’ll need to see a firm floor soon, else the pullback could quickly morph into a new leg lower in the cycle dating to March of last year.

A break below 12252 will have the reversal play gaining more momentum and at that juncture the top of the range it broke out of at 12144 will come into focus as the next level of support. At that point, a move to a new cycle low below 12000 will become the risk.

On flip-side, higher prices are still in play but some work will need to be done. Ideally, we see the low at 12252 hold up and a firm push higher from here develop. This could begin to build a sideways pattern of consolidation that would help lead USD/CAD above the December trend-line towards 12630+.

This coming week could be a pivotal one depending on how things play out, so for the immediate future it may take a little patience before we can develop a bias with conviction in either direction.

USD/CAD Daily Chart

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USD/CAD Charts by TradingView

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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.