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USD/CAD Technical Overview: Weak but Bounce Risk Rising

USD/CAD Technical Overview: Weak but Bounce Risk Rising

Paul Robinson, Strategist

USD/CAD Technical Outlook

  • USD/CAD stuck in a pervasive downtrend
  • There is support running nearby that could induce a bounce

USD/CAD Technical Overview: Weak but Bounce Risk Rising

Just yesterday USD/CAD sank to a new cycle low since the 2020 peak, and while it is stuck in a pervasive downtrend it could be nearing a point where it might post another short-term low. Running below current levels is an underside trend-line that has been in play on several occasions since June.

Given the support level is running in the direction of the trend it isn’t viewed as a substantial level of support, but enough that short-term traders may want to be mindful as price nears. Overall, a bounce could quickly fail as all bounces thus far have.

Should USD/CAD pick up momentum beneath the underside trend-line, there isn’t substantial macro support until the 12247/12061 region. The lows from 2017 and 2018 would be considered a big test if met.

For now, from a tactical standpoint the picture is a little tricky for establishing new positions in either direction. For longs, the trend is still down and support doesn’t exactly offer a high amount of conviction.

For shorts, risk/reward isn’t appealing either as a bounce off support could be near, and looking at how new lows have been short-lived in the past, it adds further reservation to chasing USD/CAD lower.

USD Forecast
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USD/CAD Daily Chart (bounce could be near)

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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.