USD vs Canadian Dollar Price Forecast: USD/CAD A Pullback or a Comeback?
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Canadian Dollar Technical analysis
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USD/CAD – Sellers Pullback
On Thursday, USD/CAD tumbled to 1.3158- its lowest level in four weeks. The price rallied after and recovered the majority of its loss on Friday then closed the weekly candlestick with nearly 0.2% loss.
Last week, the Relative Strength Index (RSI) dipped below 50. However, the oscillator rose and crossed above 50 again highlighting weak buyers and hesitant sellers.
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USD/CAD DAILY PRICE CHART (Jan 5, 2018 – DEC 10, 2019) Zoomed Out
USD/CAD DAILY PRICE CHART (June 18– DEC 10, 2019) Zoomed In
From the daily chart, we notice since Nov 20 buyers has been showing signs of weakness as some of them has been exiting the market in every trading day. This opened the door for sellers to lead the price towards its lowest level in a month as mentioned above.
On Friday USD/CAD U-turned then moved back to the higher trading zone 1.3220 – 1.3283, reflecting seller’s take profit operations at this stage. The pair closed above the 50-day average producing a bullish signal. Thus, the pair could rally for a test of the high end of the zone.
A close above the high end could embolden market’s participants to rally UASCAD towards 1.3343. Nevertheless, this rally may weaken at the daily and weekly resistance levels underlined on the chart (zoomed in) as they provide a clear exit points for some buyers.
That said, a close below the low end would encourage sellers to take the initiative again and send USDCAD towards the vicinity of 1.3109-03. In that scenario, the daily and weekly levels marked on the chart should be kept in focus.
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USD/CAD four hour PRICE CHART (Nov 6 – DEC 3, 2019)
Looking at the four- hour chart, we notice on Wednesday USD/CAD broke below the higher uptrend line on the trendline fan originated from the Nov 5 low. The price rebounded from the lower uptrend line.
A break below 1.3212 could send USDCAD towards 1.3158. Although, the weekly support level underlined on the chart should be considered. On the other hand, a break above 1.3261 could cause a rally towards the high end of the trading zone discussed above on the daily chart.
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.