USD/CAD Technical Outlook
- USD/CAD weekly reversal has lower levels in focus near-term
- Watch trend-line from June for support, a break sends lower
USD/CAD Technical Outlook: Weekly Reversal Damaging
USD/CAD broke above significant resistance just over 12600 to start the week, but the burst higher was an exhaustion move that has been fully reversed and then some. Assuming the reversal on the weekly chart stands, the outlook will continue to be for more retreating price action.
Should we see a bit of short-term strength from here, watch the level that was just overcome and the 200-day that is in near confluence. Now that price is back below it is once again viewed as resistance.
From a tactical standpoint, a revisit of resistance could offer would-be shorts and opportunity to enter with a threshold to use to assess risk. In the event of a strong push back above resistance, then we will need to reevaluate.
On further weakness from here, the June trend-line is first up as support. Should that hold, then perhaps USD/CAD will try and keep the trend off the June low going and would-be longs may want to look to enter using the trend-line as a backstop. But should the trend-line break then look for support at around the 12423 level and the top-side of a trend-line running lower from a swing-high created in December.
All-in-all, the swift rally and reversal has lower levels as the likely path. It is hard to say what the extend of the decline will be, but with more time we may be able to make a better determination of whether this is just a pullback or the beginning of a broader move lower.
USD/CAD Daily Chart
USD/CAD Weekly Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
