USD/CAD Technical Analysis: Prices Still in Digestion Mode
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- USD/CAD Technical Strategy: Flat
- Support: 1.2381, 1.2187, 1.1997
- Resistance: 1.2588, 1.2801, 1.2968
The US Dollar declined against its Canadian counterpart as expected after putting in a Bearish Engulfing candlestick pattern. Near-term support is in the 1.2381-2421 area marked by the January 27 low and the 23.6% Fibonacci retracement, with a break below that on a daily closing basis exposing the 38.2% level at 1.2187. Alternatively, a reversal above the 14.6% Fib expansion at 1.2588 opens the door for a challenge of the 1.2733-1.2801 zone (23.6% expansion, January 30 high).
Prices are too close to support to justify entering short from a risk/reward perspective. On the other hand, the absence of a defined bullish reversal signal suggests that taking up the long side is premature. With that in mind, we will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com