Canadian Dollar Outlook: USD/CAD Price - Possible Reversal on the Horizon
USD/CAD Price Outlook
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USD/CAD – Fading Uptrend Momentum
Since July 26, USD/CAD has been trading to the upside creating higher highs with higher lows. Last week, the pair tested its highest levels in seven weeks at 1.3345 then declined after, hinting to correct lower in the coming days.
Alongside this, the Relative Strength Index (RSI) climbed from 54 to 64 then remained flat after, indicating to buyer’s hesitation to keep pushing the price higher.
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USD/CAD DAILY PRICE CHART (AUG 1, 2017 – AUG 16, 2019) Zoomed Out
USD/CAD DAILY PRICE CHART (June 3 – AUG 16, 2019) Zoomed In
Looking at the daily chart, we notice yesterday USD/CAD rebounded nearby the low end of the current trading zone 1.3284 – 1.3357. The pair closed with a Doji pattern reflecting buyer’s indecision at this stage.
Thus, a close below the low end of the zone could send the pair for a test of 1.3166. Additionally, it would put the pair on course to form a double top pattern where the neckline resides at 1.3184. If USDCAD breaks and remains below this level it may return back for a test of the July 18 low at 1.3016. See the chart to know more about the lower trading zones with weekly supports in a further bearish move.
In turn, a close above the high end of the zone may push USDCAD towards 1.3459. Although, the weekly resistance area and level marked on the chart (zoomed in) should be kept in focus. See the chart to know more about the higher trading zone and weekly resistance level buyers would encounter in a further bullish scenario.
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USD/CAD Four-HOUR PRICE CHART (JUly 31 – AUg 16, 2019)
Looking at the four-hour chart, we notice on Tuesday USDCAD rallied after clearing 61.8% Fibonacci retracement at 1.3173, as discussed in our last update: USD may fall against Canadian
Hence, a break below this level may send the price lower towards 50% Fibonacci retracement at 1.3224 (convergence point with the uptrend line originated form the 31 July low). Although, the weekly support at 1.3256 needs to be considered.
On the other hand, USD/CAD any break above the August 7 High at 1.3345 would negate the double top formation mentioned above and could push cause a rally towards 1.3378. Nonetheless, the high end of the aforementioned trading zone needs to be watched closely. Further break above 1.3387 could mean more bullishness towards 1.3423. Albeit, the resistance level underlined on the chart needs to be monitored.
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.