USD/CAD Technical Highlights:
- USD/CAD snapped channel, heading towards big levels
- Price support and long-term trend-line coming back into focus
The US Dollar broke hard this week against the Canadian Dollar, sending USD/CAD tumbling out of a bullish channel that had been in place for just over a month. This didn’t come as a total surprise, as resistance and the general nature of how the pair has traded in recent months suggested the next move would be lower, even if only temporarily.
Where from here? The break was violent and suggests a bit more room to go before USD/CAD possibly finds buyers again. There is support near the 13000-line, the lows from July and October, along with a trend-line from 2017. But more importantly, the trend-line from 2012 (weekly chart) that has kept USD/CAD from sinking will soon be tested with a bit more weakness.
The rolling-over nature of the pattern we are seeing in USD/CAD, with it carving out lower-highs throughout the year, hint at the possibility of seeing a significant breakdown. But seeing is believing, especially in this low-vol environment where a large number of price swings that look ready to gain momentum are suddenly reversed.
Expect this to continue to be the case until it isn’t. If USD/CAD makes a meaningful break below 13000, which will also be below the 2012 trend-line, then a large swing lower could materialize during the first half of 2020. On the top-side, a breakout above the 2016 downtrend line and 13400 will be needed to spark real buying interest. For now, the next best short-term trade might be for those looking to fade support.
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USD/CAD Weekly Chart (2012 trend-line)
USD/CAD Daily Chart (2017 t-line, 13000ish area important price support)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
