Canadian Dollar Forecast: USD/CAD Price, Breakout Levels to Monitor
USD/CAD Technical Outlook
USD/CAD – Indecisive Bears
On Thursday, USD/CAD declined to over six weeks low at 1.3850 then rallied after and settled above the 1.3900 handle. On the following day, the pair wiped up the majority of its losses then closed with a Doji pattern, signaling the bears' indecision at this stage.
This week, the Relative Strength Index (RSI) has remained flat above 50, highlighting a paused bullish momentum.
USD/CAD DAILY PRICE CHART (AUg 9, 2018 – May 5, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (March 9 – May 5, 2020) Zoomed In
Based on analysis of the daily chart, last month USD/CAD U-turned twice before testing 1.3793 then rallied to the current trading zone 1.4000- 1.4320. Additionally, on April 21 the pair reversed lower before testing the high end of the zone. This led the price to trade in a trendless move, reflecting the trader’s hesitation at this point.
A close above the high end of the aforementioned trading zone signals a stronger bullish sentiment and may trigger a rally towards 1.4634. A further close above that level could extend this rally towards 1.4900. Yet, the weekly resistance levels underlined on the chart (zoomed in) should be watched along the way.
On the flip side, a close below the low end of the zone signals bull’s weakness. That said, it may require more than one close to send USDCAD towards the low end of the zone. A further close below that level opens the door for bears to take charge and press towards 1.3511. In that scenario, the daily and weekly support areas and levels marked on the chart should be kept in focus.
USD/CAD four hour PRICE CHART (April 9 – May 5, 2020)
Looking at the four- hour chart, on Friday USD/CAD broke above the downtrend line originated from the April 21 high at 1.4265, and generated a bullish signal. This week, the price has rebounded from 1.4152 then pointed lower.
A break below 1.3950 could send USDCAD towards 1.3850. Although, the daily support level underlined on the chart should be considered. In turn, any break in the other direction i.e. above 1.4180 may start a rally towards 1.4294. Nevertheless, the April 21 high mentioned above should be monitored closely.
Read More: What is Support and Resistance Trading?
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.