USD/CAD Technical Outlook: Looking to Snap Support, Extend Slide
- USD/CAD knocking on the door of a big support break
- Could open up a path to the 2017 low
- Move in-line with other USD pairs looking to make big moves
With the U.S. presidential election nearing a resolution with a lean in the vote towards a Biden win, markets are making decisive moves. Collectively, the dollar is heading lower across the board. This has significant pressure on USD/CAD, putting it in position to break big long-term support.
The 13000-line has long been in play for the pair, dating back to the late days of the GFC in 2008/09 when USD/CAD spiked and reversed hard from that level. It hasn’t been the cleanest level, it’s a sort of ‘hidden’ threshold – but there have been several pivots around it since January 2017.
The most recent pivot came in August. There is also an underside parallel running up from 2017 that is in confluence. Collectively this makes the current test very important. To really get into ‘open space’ USD/CAD needs to break the 2019 low at 12951.
A break below support will open up a path to test levels from 2018, with potential to trade down to the 2017 low at 12061. It’s a big drop from here, but considering we came from 14600 earlier in the year, it is certainly doable in the months ahead.
But before running with too aggressive of a short bias support needs to first break. It may happen soon, but it may not happen until after another bounce. And, it may not happen at all even though it looks like the most likely scenario at this time. The bottom line is, support (& resistance) should be respected until broken.
USD/CAD Weekly Chart (Major level of support around 13000)
USD/CAD Daily Chart (trend from March looks set to continue)
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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.