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USD/CAD Technical Outlook: Big Support Test Nearing

USD/CAD Technical Outlook: Big Support Test Nearing

Paul Robinson, Strategist

USD/CAD Technical Outlook

  • USD/CAD declining into big support
  • Could help bring clarity, but price is still stuck in a big-picture wedge
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USD/CAD Technical Outlook: Big Support Test Nearing

USD/CAD has been extremely choppy lately, making for nearly untradable conditions for most traders. A test of big trend support rising up from the 2021 low could help bring some clarity in the near-term, but still leave the big-picture in question.

The May trend-line was recently tested and successfully held early in the month, adding further validity to it. In confluence with the line is the 200-day moving average that has taken on an increasingly bullish slope since the start of the year. The two technical thresholds are creating for a strong floor to watch.

A strong reaction off support could give traders a chance to ride momentum higher in the near-term, and possibly as high as 12950 in the relatively near future. If 12950 is hit it will be another major test of a long-term level dating to December 2019.

The trend-line from May of last year and the top-side level from 2019 are converging towards the apex of an ascending wedge. This pattern, given its size and symmetry, has the potential to lead to a very powerful move at some point between now and the middle of the year.

Which direction is yet to be seen, but given the ascending nature of it higher is seen as the more likely path. But again, we will need to wait for confirmation. Seeing the pattern mature towards a sharper apex into say, May, will offer up a better-looking breakout scenario. Price could always break lower too. Or we may see a fake-out before a final resolution. We will revisit at a later time when the pattern becomes more relevant, but a big move could be brewing. Finally.

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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