Canadian Dollar – USD/CAD Rally Running into Meaningful Opposition
USD/CAD Technical Highlights:
- USD/CAD running into 200-day, trend-line resistance
- Watch how price action plays out in this area
The Canadian Dollar continues to take a hit against the US Dollar after USD/CAD very nearly experienced a major long-term support-break at the end of October. Instead of a break, though, we are now looking at a test of meaningful intermediate-term resistance. The price of USD/CAD came just shy of the 200-day and May trend-line combo in yesterday’s session.
The confluent resistance is viewed as significant for how things unfold in the near-term. So far there has only been a minor reaction just below the area in question, so seeing a strong push into or above resistance levels and then failing with force would be ideal to see just how meaningful the price zone is. Or, a breakout through without hesitation.
In the event of a strong reaction lower, then a pullback at the least, if not a move back towards the October low at 10342 or worse. The low from last month may be about as far as things get, though, before another recovery takes shape. It’s been that kind of see-saw, low-vol trading environment. To turn things critical, USD/CAD will need to close below 13000 on a weekly basis.
On the flip-side, a rally through the 200-day/trend-line combo won’t get USD/CAD into open space just yet, but could be the beginnings of something larger. The area from 13330 up to 13382 will be a tough spot to get through. To turn the macro outlook bullish, a sustained break into the 13400s looks to be needed.
For now, short-term traders can use the discussed crossroad just ahead on the daily chart to help shape their broader trading bias, along with the 4-hr chart for near-term trend cues. The trend-line rising up from late last month is keeping the upward bias intact for now (could also end up part of a developed rising wedge breakout).
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USD/CAD Daily Chart (confluent resistance)
USD/CAD 4-hr Chart (watch rising trend-line)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.