Canadian Dollar Forecast: USD/CAD Test at Major Resistance Coming
CAD Technical Outlook
- USD/CAD running into a major area of confluent resistance
- How things play out here soon could be quite important
USD/CAD in for a major test
USD/CAD is trading at its best levels since April and could continue to reach into even loftier levels, but it will need to get through a significant area of resistance first. Running lower is the 200-day moving average, currently at 12627. In confluence with the MA is an area of price surrounding 12600 that has acted as both support and resistance this year.
Just above 12600 began as support in January, which later turned into a clear area of resistance during March and April. Given the amount of attention it received in the first four months of the year it is likely to act as a meaningful level that brings in some type of reaction. Especially with the 200-day right there.
A strong reversal could be indicative that price will retreat for a while, but a modest reaction (which is to be expected) may only indicate a temporary bump in the road before price resumes higher. It would be a constructive series if for a few days USD/CAD traded sideways before attempting to break on through to the other side.
Should we see price break sharply higher and clear resistance definitively, then resistance will become viewed as a source of support on any pullback that may ensue later.
For now, in wait-and-see mode, but we should gain better clarity in the days ahead.
USD/CAD Daily Chart
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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.