USD/CAD Technical Outlook: Range Creating an Opportunity
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USD/CAD Technical Outlook
- USD/CAD trending nowhere sets up for a big move
- Difficult to say which direction, go with the break
USD/CAD Technical Outlook: Tight Trading Conditions to Lead to Opportunity
USD/CAD continues its sideways meander, going nowhere – fast. This type of price action makes for bad trading in the near-term, but can result in a solid opportunity for those who are patient. A breakout is imminent at this point.
The unsustainable sideways path could go on for a bit longer, though, before we see a breakout develop, and this would actually be viewed as a good thing. Often times, the longer the sideways move the more explosive the eventual move is.
Which way will the range resolve? It could be in-line with the thrust off the yearly low, with the sideways price action acting as a bullish consolidation pattern. Or, it could be lower. It really isn’t worth trying to figure out right now.
On the top-side, a breakout above 12796 is needed to get things into gear. This would have the all-important 12950 level in focus, a level that dates to December 2019, with its most recent touch coming in December.
On the flip-side, if we see price breakdown develop there is good support in the 12650s, but the ultimate low of the congestion is at 12636. A breakdown would result in the June trend-line and confluent 200-day moving average quickly coming into play. It’s a big spot like 12950 is on the top-side.
We could see a fake-out breakout first before having a full resolution. That is, a break of either support or resistance followed by a quick reversal back inside the range and eventual breakout through the other side of the range. These can be even more powerful as the fake-break results in catching the crowd leaning the wrong way.
Whether we get a clean top or bottom side break or a fake-out breakout first, an opportunity is brewing in USD/CAD. With a little more time traders should be presented with a sustained move in either direction. We just may need to be patient for a little while longer.
USD/CAD Daily Chart
USD/CAD 4-hr Chart
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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.