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Canadian Dollar Outlook – USD/CAD Hurdling Resistance May Be a Big Ask

Canadian Dollar Outlook – USD/CAD Hurdling Resistance May Be a Big Ask

2020-02-06 12:00:00
Paul Robinson, Strategist

USD/CAD Technical Highlights:

  • USD/CAD is pressed up against 2016 trend-line, H2 ’19 swing highs near
  • Low volatility suggests a reversal lower may soon be in store
  • A break towards 13400 gives a chance at a breakout

USD/CAD continues to hold a bid after the sprint off the low from the last trading day of 2019, but can it maintain and rally any further? With FX volatility still hovering around record lows it might be a tall ask for the pair to finally push on through a thicket of resistance around current levels.

Coming down from the 2016 spike-high is a trend-line that passes over a pair of peaks set last year. Additionally, there is a low-angled line extending lower over Sep, Oct, and Dec swing-highs. The bigger line of resistance is from 2016, but the lesser important angle of resistance makes the area even more difficult for USD/CAD to run through.

A crossing of those trend-lines will give rise to odds of a breakout, but there is one last set of hurdles before USD/CAD can put itself in the clear. The three peaks just mentioned (Sep, Oct, Dec) are all in very close proximity. To break out into open territory we will need to see the downtrend lines broken along with the final peak (from Sep) at 13382.

Cross above 13382 with conviction and we may very well see a sustainable trend higher develop. However, again with volatility at historically low levels, there might not be enough power in the punch to get the breakout. If recent history holds true, then we may soon see price rejected and start to trade lower as it did several times in the final four months of 2019.

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USD/CAD Daily Chart (big spot from here up to 13382)

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***Updates will be provided on the above thoughts and others in the trading/technical outlook webinars held at 1030 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

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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.