USD/CAD Technical Outlook
- USD/CAD breaking out after bullish price action, has big upside potential
- A failure to hold above the recent highs would negate this outlook
USD/CAD Technical Outlook: Ready to Grow Legs and Run
USD/CAD looks ready to run. The other day I wrote that the “strengthening of price action around the top of an extended range suggests it is about to break, and the move could be quite explosive.” The bullish price action the past few weeks led to three peaks, with the fourth attempt giving way.
Often times this is the case with a level, the fourth play on a level is the one that takes it out. With the 13076/83 area taken out look for USD/CAD to make good on the breakout. The key will be how today closes, though. As long as we see the breakout sustain then it’s a valid.
We could perhaps see a testing of the breakout soon after, which would be a welcomed event in my view given the opportunity for would-be longs to enter or increase position size around the original breakout price. The stopping point being a full breakdown back inside the range.
How far could USD/CAD run? With it coming out of a nearly year-long slumber of a choppy range and given the high-vol environment we are in, the answer is it could run a lot. The first level to watch in the near-term clocks in at 13420, a minor swing level from 2020.
The thinking is that the rally could extend much higher than that, though. Much. The highs from 2016 and 2020 over 14600 appear to be a plausible target in the coming months. This would still have USD/CAD within a large scope range, so while it is a good ways higher from here it is within reasonable expectations.
For now, going to focus on seeing whether the breakout can hold and then take it from there. As long as it holds then the trading bias will remain bullish for the foreseeable future.
USD/CAD Weekly Chart
USD/CAD Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
