Canadian Dollar Forecast: USD/CAD Failed at Resistance, Now Eyes the Support
USD/CAD Technical Outlook
- Bullish momentum is weaker yet, still intact
- Will USDCAD bulls comeback ?
USD/CAD Edges Lower
On March 19, USD/CAD peaked at 1.4668 the price retreated after, as some bulls seemed to ease up. Last week, similar scenario happened and bulls cut back further allowing the pair to decline to 1.3922. As a result, the weekly candlestick closed in the red with 2.4% loss.
This week, the Relative Strength Index (RSI) abandoned overbought territory then remained flat above 50 highlighting paused uptrend move.
USD/CAD DAILY PRICE CHART (Nov 1, 2018 – April 2, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (FEB 25 – April 2, 2020) Zoomed In
From the daily chart, we noticed last week bulls showed hesitation and this led USD/CAD to fall to current trading zone 1.4000 – 1.4320. This week, the market opened with a gap to the upside then pushed towards the high end of the zone. Although, the pair failed to rally to the higher zone, reflecting further hesitation from bull’s at this stage.
Thus, a close below the low end of the zone could lead USDCAD towards 1.3793. Further close below that level may send the price even lower towards 1.3511. Thar said, the weekly support levels and area marked on the chart (zoomed in) should be watched closely.
On the flipside, a successful close above the high end may encourage bulls to push towards 1.4634. Further close above this level could mean more bullishness towards 1.4900 handle. In that scenario, the daily and weekly resistance levels underscored on the chart would be worth monitoring.
USD/CAD four hour PRICE CHART (Mar 16 – April 2, 2020)
Looking at the four- hour chart, we noticed that on Tuesday USD/CAD corrected its downtrend move and created a higher low at 1.4012. Yet, remained trading below the downtrend move originated from the March 19 high at 1.4668. Any violation to the downtrend line could send the price towards 1.4500 handle.
Thus, a break above 1.4451 would be considered an additional bullish signal. This may increase the likelihood for USDCAD to test 1.4634. Although, the weekly resistance level underlined on the chart should be kept in focus. In turn, any break in the other direction i.e. below 1.3895 could send the price towards 1.3793. Nevertheless, the support level at 1.3859 should be considered.
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.