Canadian Dollar Price Outlook – USD/CAD Pullback May Be Over
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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)
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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.