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USD/CAD Technical Outlook: Sideways Pattern to Determine Next Move

USD/CAD Technical Outlook: Sideways Pattern to Determine Next Move

Paul Robinson, Strategist

USD/CAD Technical Outlook

  • USD/CAD been stuck moving horizontally after surge higher
  • Consolidation for further gains or downside failure?

USD/CAD Technical Outlook: Sideways Pattern to Determine Next Move

USD/CAD has effectively gone nowhere the past week-and-a-half after surging off the January lows. The question is whether it is a consolidation for more gains, or will USD/CAD roll over. It will likely take a few more days before we have a resolution, but there are some things to watch for either scenario.

Giving the surge from the lows the benefit of the doubt, this could very well be a digestion period before running higher. A bit more sideways price action could do this scenario some good as a stronger base gets built.

A breakout above 12797 would have USD/CAD off towards significant long-term resistance around 12950. This is a level we have discussed a lot over the past few months. It dates to December 2019 and has been in play on several occasions since, with the last inflection point occurring in December.

On the flip-side, further consolidation followed by a move out of the range to the downside could set up for a swift move back to big support. A break down below 12650 will have the recent congestion lows breached and likely increase selling pressure.

In this scenario, the target would be confluent support between the June trend-line and rising 200-day moving average. The two currently converge around the low 12500s. This is a moving target of course with both the trend-line and average sloping higher.

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USD/CAD Daily Chart

usd/cad daily chart

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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