Canadian Dollar Price Outlook – USD/CAD Pullback May Be Over
USD/CAD Technical Highlights:
- USD/CAD pullback from 2016 peak may be over
- The 13920 level is the low to watch for now
USD/CAD ran into resistance a couple of weeks back via the 2016 highs, initially the pullback was looking like it might be shallow but then a minor wave of selling hit. The selling may be over now, with the Friday low at 13920 acting as the line-in-the-sand to watch.
A surge higher again may not be the path, so expectations of how a rally might play out need to be tempered. Given the size of the run prior to hitting the 2016 highs, a congestion phase lasting a little while may be needed before USD/CAD can the gain the footing needed to trade to levels not seen since the early 2000s.
A break below 13920 won’t damage the overall trend higher since January, but it would be reason for caution to stand aside until things firm up again. A sustained rally beyond 14690 (2016 high) will turn attention towards the 2002 peak at 16185. It’s a good distance from here but certainly attainable in the months ahead.
For short-term traders not looking to hold beyond a few days or weeks, a breakout on the long-term chart helps shape the trading bias; Looking for shorter-term bullish set-ups (i.e. daily or 4-hr consolidation patterns) could prove fruitful. For now, there is still a bit of room from here to get back to resistance as long as the 13920 low holds.
USD/CAD Daily Chart (13920 the level to watch)
USD/CAD Weekly Chart (above 2016 high brings in early-2000s)
***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.