USD/CAD Technical Analysis: Eyeing a Bullish Break of Resistance?
USD/CAD Technical Analysis
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- USUSD/CAD moving in a sideways pattern, But in but at a higher level
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USD/CAD Daily Price Chart (Feb 2019 –May 15, 2019)
Consolidating in a Higher Range
On May 6, USD/CAD corrected its upside movement by carving out a lower-high at 1.3494. Since hitting that high the pair has been moving in a sideways pattern with price pushing towards levels highlighted in Friday’s update. Price held, creating a higher-low at 1.3380 and closed the week above 1.3410.
On Monday, USD/CAD opened with an upside gap, showing momentum for a rally towards the higher end of the trading range and in the process increased the likelihood of breaking through 1.3444 and 1.3457 . Additionally, price closed above the upper line of the trend-line fan originated from the April 22 low.
Read more in: USD/CAD looking for a break below 1.3376
Meanwhile, Relative Strength Indicator (RSI) on May 13 crossed from below 50 to 57, hinting at a start of an upward momentum.
To Sum up: Since March 1, USD/CAD has been stuck in a consolidation zone (1.3286 – 1.3457). The price on April 23 broke higher and started to trade within a higher range (1.3516 – 1.3377) so if the pair remains above 1.3457 the price could push towards the higher end of the trading range at 1.3516. Resistance levels at 1.3492 and 1.3506 are in focus. If the price closes above 1.3516 the pair could rally towards 1.3550, contingent on clearing the zone of 1.3529 – 1.3536.
What if USD/CAD Edges Lower?
If USD/CAD closes below 1.3457 the pair may swing lower towards 1.3410. Support levels at 1.3443 and 1.3429 need to be watched along the way. If the bearish movements are stronger (closing below 1.3410) it would suggest a decline towards 1.3377 however; support levels at 1.3400 and 1.3388 may be worth monitoring.
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USD/CAD 2 Hours Price Chart (May 15, 2019)
Bearish Potential Below 1.3456
On May 13, USD/CAD printed 1.3488 – its highest level in 4 days. The price failed the next day to break above this level, therefore, if the pair can break above this threshold it could suggest a bullish sentiment towards 1.3506, taking into consideration the aforementioned resistance level.
If the pair fails to break above it would create a third high and form a triple top pattern where the neckline resides at 1.3456. USD/CAD needs to clear the supports levels at 1.3473, 1.3465, and the 23.6% Fibonacci retracement at 1.3461 before testing the neckline. If price breaks and remains below 1.3456 a bearish bias could drive the price towards 1.3425, while also considering the support levels mentioned above.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.