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Canadian Dollar Outlook: Trendless Price Action - Where is USD/CAD Next Test?

Canadian Dollar Outlook: Trendless Price Action - Where is USD/CAD Next Test?

Mahmoud Alkudsi, Analyst
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Canadian Dollar Price

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USD/CAD – Stuck in Sideways Move

On August 15, USD/CAD corrected lower creating a lower high at 1.3339. Since then, the pair has been trading without a clear direction creating higher highs with lower lows.

Alongside this, the Relative Strength Index (RSI) has been in a descending course creating lower highs although, the oscillator U-turned before 50 indicating to the uptrend loss of momentum on one side and the lack of impulse to start a downtrend.

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USD/CAD DAILY PRICE CHART (Sep 30, 2017 – AUG 30, 2019) Zoomed Out

USDCAD price daily chart 30-08-19 Zoomed out

USD/CAD DAILY PRICE CHART (June 10 – AUG 30, 2019) Zoomed In

USDCAD price daily chart 30-08-19. Zoomed in

Looking at the daily chart we notice, on Tuesday USD/CAD returned back to the trading zone 1.3256 – 1.3357 and currently, the pair eyes a test of the high end.

Therefore, a close above the high end of the zone could push the price towards the vicinity of 1.3418-20. However, the weekly resistance area marked on the chart (zoomed in) needs to be kept in focus.

It’s worth noting that USDCAD is on course to create a bullish formation (ascending triangle) although, the pair could test the low line before any break out above 1.3346 towards 1.3505.

Thus, close below the low end of the zone could negate this formation and may send the price towards 1.3166. Nonetheless, the weekly support level underlined on the chart should be considered. Further close below this level may see USDCAD trading even lower towards 1.3124.

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USD/CAD Four-HOUR PRICE CHART (July 30 – AUg 30, 2019)

USDCAD price four- hour chart 30-08-19

Looking at the four-hour chart, we notice on August 27 USD/CAD rebounded from 1.3225 – its lowest level in two weeks. The pair rallied then closed with a Doji pattern indicating to the buyer’s indecision to continue leading the price.

Therefore, a break below 1.3269 could send the price towards the aforementioned August 27 low. Although, the low end of current trading zone at 1.3256 would be worth monitoring. See the chart to know more about lower support levels USDCAD would face if the price continues to fall.

In turn, a break above 1.3360 could push the price towards 1.3387. However, the weekly resistance level underscored on the chart needs to be watched closely. See the chart to know more about higher resistance levels USDCAD may encounter if the price continues to rally.

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.