USD/CAD Technical Outlook
- USD/CAD trading around confluent support, 200-day MA and trend-line
- Multiple daily reversals at support suggest higher levels may soon come
USD/CAD Technical Outlook: Bullish Price Action at Confluent Support
Not long ago USD/CAD fell from a clear head-and-shoulders pattern, and while the pattern break was valid the question we were asking is whether its bearish potential would be met or not. That is, by declining to its measured move target of around 12300.
Given the recent price action around confluent support the move indeed looks at risk of being truncated. In near exact alignment are the 200-day moving average and trend-line from June. On multiple occasions in recent sessions USD/CAD either tested or attempted to break support on an intra-day basis only to end the day near session highs.
These repeated rejections at support are a strong indication that this indeed important support to continue to monitor, and that it is likely to hold. As long as a daily close below Wednesday’s low at 12450 doesn’t develop then the trading bias is neutral at worst.
Looking higher, a break above the Jan 14 high at 12570 should have USD/CAD running towards a test of the neckline of the head-and-shoulders pattern. That would occur in the 12606 to 12625 area. From there we can reassess based on how price action behaves at the first test of meaningful resistance.
If in the event USD/CAD breaks the aforementioned support at 12450, then it is anticipated that the October low at 12288 will come into play and the full potential of the head-and-shoulders will be realized.
USD/CAD Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
