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USD/CAD Technical Analysis: Seven-Week Support Broken

USD/CAD Technical Analysis: Seven-Week Support Broken

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • USD/CAD Technical Strategy: Flat
  • Support: 1.2328, 1.2181, 1.2035
  • Resistance: 1.2494, 1.2646, 1.2827

The US Dollar turned lower against its Canadian counterpart as expected after putting in a Bearish Engulfing candlestick pattern. Near-term support is in the 1.2328-81area, marked by the 38.2%Fibonacci retracement and the January 27 low, with a break below that on a daily closing basis exposing the 50% level at 1.2181. Alternatively, reversal above trend line support-turned-resistance at 1.2494 opens the door for a challenge of the 23.6% Fib expansion at 1.2646.

Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.

Add these technical levels directly to your charts with our Support/Resistance Wizard app!

USD/CAD Technical Analysis: Seven-Week Support Broken

Daily Chart - Created Using FXCM Marketscope

--- 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.

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