Canadian Dollar – USD/CAD May Snap Month-long Uptrend
USD/CAD Technical Highlights:
- USD/CAD turning down from highlighted area of resistance
- Bullish channel coming under fire, could break soon
The US Dollar recently ran out of momentum versus the Canadian Dollar, as the lower end of a resistance zone from near 13330 up to 13382 came into play. The month-long rally may have run its course for now, setting up for a reaction lower as range-trading conditions will likely persist.
It may take more push-pull up around resistance before we see a breakdown, so keep an eye on the channel structure off the late-October low. There are a couple of ways one can draw in the parallels. The first off of the October 29 low, and the other off a pivot on November 5.
A breach of both lower parallels and 13254 will be viewed as a reason to look for USD/CAD to continue lower. The first support levels to watch in the event of a break are 13191 and 13115. A full retracement of the up-move isn’t out of the question, but we will want to see how aggressive selling is on a channel-break, first, before determining potential.
But before we can even get to the bearish scenario here, support should be respected and until it breaks the channel structure keeps the USD/CAD outlook neutral to bullish. A further probing of resistance may still be in store up to levels from August-October and the 2016 trend-line.
It seems unlikely at this time that a sustained bullish breakout will develop given the low-volatility, choppy trading environment we remain stuck in.
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USD/CAD Daily Chart (turning down from resistance zone)
USD/CAD 4-hr Chart (lower side of channel coming into play)
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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.