Forex: USD/CAD Technical Analysis – 5-Month Trend Line at Risk
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- USD/CAD Technical Strategy: Flat
- Support: 1.1019 (trend line cluster, 23.6% Fib ret.), 1.0859 (38.2% Fib ret.)
- Resistance: 1.1126 (horizontal pivot), 1.1278 (Mar 20 high)
The US Dollar pulled back as expected against its Canadian counterpart after putting in a Shooting Star candlestick. Prices are now testing below support at 1.1019, the intersection of a trend line cluster and the 23.6% Fibonacci retracement. A break below this boundary exposes the 38.2% level at 1.0859. Near-term resistance is at 1.1126, a horizontal pivot, with a reversal back above that eyeing the March 20 high at 1.1278.
Our long positionfrom 1.1166 was stopped out yesterday. Re-evaluating positioning, risk/reward considerations argue against entering short absent a clear break of support on a daily closing basis. On the other hand, a long trade on the assumption that support will hold is premature without a defined reversal signal. As such, we will stand aside for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.