Canadian Dollar Forecast: USD/CAD Price Retests Key Support Level, What’s Next?
USD/CAD Technical Forecast
USD/CAD – Fading Bullish Momentum
On Tuesday, USD/CAD printed its highest level in a near four week high at 1.4265. However, the price retreated after and settled below 1.4200 handle. Yet, on Friday the weekly candlestick closed in the green with a 0.7% gain.
Alongside that, the Relative Strength Index (RSI) fell from 58 to 50 signaling that bulls were losing momentum.
USD/CAD DAILY PRICE CHART (AUg 9, 2018 – April 28, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (March 9 – April 28, 2020) Zoomed In
From the daily chart, I noticed that on April 15 USD/CAD climbed to the current trading zone 1.4000- 1.4320. Since then, the price has rebounded twice from the low end of the zone highlighting weaker selling pressure.
Today, the market retests the low end of the zone. Thus, a close below the low end could start a bearish sentiment towards 1.3793. A further close below this level may send USDCAD even lower towards 1.3511. Having said that, the weekly support levels underscored on the chart (Zoomed in) should be monitored.
On the other hand, another failure in closing below the low end of the zone signals more bears hesitation. This would mean more of the same i.e. a possible rally towards the high end of the zone. A further close above that level could extend this rally towards 1.4534. In that scenario, the weekly resistance levels marked on the chart should be watched along the way.
USD/CAD four hour PRICE CHART (April 9 – April 28, 2020)
Looking at the four- hour chart, I notice that on Thursday USD/CAD broke below the uptrend line originated from the April 17 low at 1.4001 generating a bearish signal. Later on, the price stuck in a narrow range a rough 120 pips.
A break below 1.3950 would be considered another bearish signal. This could send the price towards 1.3889. Yet, the support level at 1.3925 should be considered. In turn, any break in the other direction i.e. above 1.4118 may cause a rally towards 1.4179. Nevertheless, 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, Market Analyst
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.