USD/CAD Technical Outlook
- USD/CAD range has been extremely tight for nearly a month
- This type of price action isn’t sustainable
- Break lower is in-line with trend, but can’t rule out a squeeze
USD/CAD Technical Outlook: ‘Boring’ Price Action to End Soon
USD/CAD has been moving sideways for nearly a month in a manner that isn’t often seen even if was just seen as recent as April. Prior to then you had to go back to the middle of last year to find similarly tight conditions.
Tight conditions set markets up for breakouts. Given the prevailing trend is down, a breakout is anticipated to occur to the downside, but we can’t rule out a countertrend squeeze. But let’s first look at the downside and to watch for, then dive into the less likely scenario of a squeeze developing.
On a clean break below 12006 we could see USD/CAD finally get some separation from the 2017 low, a level that has been a big reason as to why price has been unable to decline further. A breakdown will quickly have in focus a level from 2015 at 11919, but it is unclear how meaningful it will be.
It is possible that it has little impact and the trend lower continues with force. We will want to watch for signs of a reversal should price reach that level. If none show up then running with the trend and momentum will makes sense. If a large reaction occurs then will need to adjust the outlook accordingly.
In the squeeze scenario, price will need to climb above the June 2020 slope that went from a line of support to a line of resistance recently. A breakout above that line and 12144 (recent peaks) could set up for a run to the 2018 low at 12246, then towards 12400 if momentum really picks up.
USD/CAD Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
