Canadian Dollar USD/CAD Price Trades Lower at a Risk of Reversal
Canadian Dollar Technical Forecast
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USD/CAD – Sellers in Charge
On Oct 18, USD/CAD broke below the neckline of double top pattern residing at 1.3134, then fell to multi- month low eyeing a test of 1.2920. Additionally, the weekly candlestick closed with nearly 0.5% loss, highlighting the bearish outlook of the market.
Last week, the Relative Strength Index (RSI) fell from 45 to 30 emphasizing the strength of downtrend momentum.
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USD/CAD DAILY PRICE CHART (DEC 18, 2017 – OCT 28, 2019) Zoomed Out
USD/CAD DAILY PRICE CHART (July 15– Oct 28, 2019) Zoomed In
From the daily chart, we notice on Friday, the pair declined to a lower trading zone 1.3008 – 1.3064. Today, the price opened with upward gap however, gap has been filled and sellers recovered control and pressed the pair to the downside.
Thus, a close below the high end of the zone could send USDCAD towards the low end of the zone. Further close below the low end could mark the beginning of a new leg lower towards 1.2950. Nevertheless, the weekly support areas underlined on the chart (zoomed in) should be kept in focus.
That said, any failure in closing below the high end would mean seller’s hesitation and may open the door for USDCAD to correct higher towards 1.3166. Although, the price should clear daily resistance levels marked on the chart specially, the aforementioned double top neckline. Needless to say, any close above it would negate the pattern.
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USD/CAD four hour PRICE CHART (Sep 24 – Oct 28, 2019)
Looking at the four- hour chart, last week USD/CAD continued trading lower rebounding twice nearby 1.3052 creating a double bottom pattern. This suggests if the price breaks and remains above the neckline located at 1.3093 the pair could rally towards 1.3134. Although, the daily resistance underlined on the chart should be considered.
Having said that, USDCAD may resume bearish price action if breaks below 1.3048. In that scenario, the price could swing lower towards 1.3008. However, the weekly resistance underscored on the chart should be watched closely.
See the chart to know more about key levels to monitor in a further bullish/bearish move.
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.