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USD/CAD Technical Outlook: Trying to Bottom at Long-term Support

USD/CAD Technical Outlook: Trying to Bottom at Long-term Support

Paul Robinson, Strategist

USD/CAD Highlights:

  • Long-term support from 2009 been helping keep a floor in
  • Channel line from 2017 in confluence with 11-year support line

USD/CAD has been testing a big area of support that dates back to the Great Financial Crisis, with the level not that obvious at times given it runs through a lot of price action over the years. But nevertheless the 13000 line has been big, with it acting as support now three times going back to last year.

There is a trend-line (lower parallel tied to a top-side trend-line extending over the 2017/20 highs) that is also in confluence with the 13000 level. This makes for a good floor that if maintained at the very least keeps the outlook neutral, but if broken could lead to a sizable leg lower as strong support isn’t to be found for some distance below.

It is possible that USD/CAD is trying to carve a higher-low from the September 1 low, but some more work is needed to turn the near-term favorable for taking long-side bets. With a little more strength above 13259 and a demonstration that price wants to hold, then we could look to the September high at 13418 as the next level of resistance. This would indeed be a big test.

Should price sag some more then shorts will remain in control, but with the 13000 level so close by it doesn’t make for the most appealing risk/reward set-up to be an aggressive seller. A break through the September low, though, would be reason to dial it up in looking for a stronger move to the downside.

USD/CAD Weekly Chart (Major level of support around 13000)

USD/CAD weekly chart

USD/CAD Daily Chart (in state of limbo at the moment)

USD/CAD daily chart

USD/CAD Charts by TradingView

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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.