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USD/CAD Technical Outlook: Pressuring Important Support

USD/CAD Technical Outlook: Pressuring Important Support

Paul Robinson, Strategist

USD/CAD Technical Outlook

  • USD/CAD trading on June trend-line
  • Hold support and could rally, break and weakness is expected

USD/CAD Technical Outlook: Pressuring Trend Support

USD/CAD is currently sitting on an important line of trend support via the June trend-line. It has been keeping the pair afloat in recent sessions. Earlier in the week we saw a semi-strong push off support, validating the trend-lines importance as support.

The line is also in confluence with a consolidation period that developed during the first half off September. If support can continue to hold with price staying above 12593 on a daily closing basis, then USD/CAD still has a shot at putting together a rally. It may be a slow developer as volatility is generally low, but nevertheless as long as support holds so does a neutral to bullish trading bias.

On the flip-side, if support breaks here soon then we could see a period of weakness set in. in the event of a breakdown, first up as support is the 200-day at 12516 followed by the September low at 12493. A break lower to these levels would leave the intermediate picture in limbo still as we have seen no progress out of USD/CAD in some time.

Tactically speaking, risk/reward is somewhat in favor of those looking to establish bullish bets as support is situated just USD/CAD’s feet. A small push lower followed by a rejection that keeps support intact may help bolster confidence that support will maintain. But conviction isn’t particularly strong as the trend up since June hasn’t been clean for the most part.

For those looking to short, this is viewed as a dangerous spot given support is in the current vicinity. A breaking of aforementioned levels (trend-line/12593) is needed first before the short side can grow legs.

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USD/CAD Daily Chart

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USD/CAD Chart 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.

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