Canadian Dollar: USD/CAD Price Forecast, Will Bears Turn the Tide?
USD/CAD Technical Outlook
- Bulls pull back around over four years high
- Thresholds and trading zone to monitor
Bulls Ease Up
On March 18, USD/CAD rallied to a multi – year high at 1.4652 then retreated after, as some bulls seemed to cut back. In the following day, the price failed again to close above 1.4634 highlighting bull’s hesitation to rally the market further.
This week, the Relative Strength Index (RSI) abandoned overbought territory indicating weaker uptrend momentum.
USD/CAD DAILY PRICE CHART (Nov 1, 2018 – Mar 27, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (FEB 25 – Mar 27, 2020) Zoomed In
From the daily chart, we noticed that on Monday, USD/CAD closed the daily candlestick with a long legged Doji pattern highlighting bull’s indecision at this stage. Later on, the market fell to current trading zone 1.4000 – 1.4320.
A close below the low end of the zone reflects more reluctance from bull’s side and would possibly lead USDCAD towards 1.3793. Further close below that level may encourage bears to take charge and press towards 1.3511. In that scenario, the weekly support levels and area marked on the chart (zoomed in) should be watched closely as some traders could join/exit the market around these points.
On the flip-side, any failure in closing below the low end of the zone could reverse the pair’s direction towards the high end of the zone. Further close above that level may entice bulls to retest 1.4634. Having said that, the daily resistance levels underlined on the chart should be considered.
USD/CAD four hour PRICE CHART (Mar 16 – Mar 27, 2020)
Looking at the four- hour chart, we noticed that yesterday USD/CAD broke below the double top neckline discussed in our last update located at 1.4150, eyeing a test of 1.3670.
A break below 1.3950 would generate another bearish signal. This could send USDCAD towards 1.3858. Yet, the weekly support level underscored on the chart should be monitored. On the other hand, any break above 1.4451 may cause a rally towards 1.4615. Although, the daily resistance level printed on the chart should be kept in focus.
See the chart to find out more about the key technical levels in a further bullish/bearish scenario.
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.