USD/CAD Technical Analysis: Closing In On a Breakout
-USD/CAD Technical Strategy: Favoring Upside After Breaking October High
- November Opening Range Low(1.3037) Now Formidable Support
USDCAD followed suit and rose through prior key resistance on Friday after a sizeable beat on October NFP at 271,000 jobs added, and Average Hourly Earnings were up 0.4% month over month. The convincing bounce from major support in October may have a ways to go from here. While USD/CAD has spent Monday drifting lower, a strong US Dollar and potentially increasingly weak US Oil could set the stage for an end-of-year-rally to fresh 11-year highs toward 1.3500.
The firm support to watch now is 1.3037, the November opening range low. Given the strength of USD post-NFP, it’s costly to call a lower-high in USD/CAD. Before NFP, USD/CAD found short-term resistance at 1.3160-1.3190 before cracking through on the print. That level could act as attractive support and a place to enter a long trades for a move to new highs with a tight risk: reward. The consolidation should worry bulls unless 1.3160 breaks followed by 1.3037. Until then, it looks like a bull-flag is tracing out that often leads to sharp rises in the direction of the trend.
The pre-NFP low on the morning of November 5th was 1.3140. The post-NFP high (so far) is sitting at 1.3317, and the 38.2%-61.8% Fibonacci retracement zone currently lands between 1.3249-1.3207. A pull back into this zone would allow stops to be relatively tight with an expectation that broad USD support would remain strong before resuming the long-term bull channel. Short-term targets could currently sit near the September 28th high of 1.3398, followed by the YTD high set on September 29th at 1.3456.
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