USD/CAD Technical Analysis: Cautiously Edging Upward

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Talking Points:

• USD/CAD Technical Strategy: Flat
• Support: 1.2213, 1.2105, 1.1997
• Resistance: 1.2384, 1.2562, 1.2675

The US Dollar turned lower against its Canadian counterpart as expected after producing a Bearish Engulfing candlestick pattern. A daily close below the 38.2% Fibonacci expansion at 1.2213 exposes the 50% level at 1.2105. Alternatively, a rebound above the 1.2346-84 area (horizontal pivot, 23.6% Fib) opens the door for a challenge of the June 1 high at 1.2562.

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

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com