Canadian Dollar Technical Forecast
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USD/CAD – Stalled Momentum
On Friday, USD/CAD closed in the red with a 0.1% loss. Yesterday, the price remained trading in a narrow range and has not been able to revisit last month high, reflecting hesitant buyers at this stage.
Last week, the Relative Strength Index (RSI) remained flat above 50, indicating to weak buyers in a bullish market.
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USD/CAD DAILY PRICE CHART (Sep 15, 2017 – DEC 3, 2019) Zoomed Out
USD/CAD DAILY PRICE CHART (June 18– DEC 3, 2019) Zoomed In
From the daily chart, we notice on Nov 20 USD/CAD rallied to its highest level in six weeks, then some buyers took profit. This caused a pause in current uptrend. However, majority of buyers held positions keeping the pair trading in current trading zone 1.3256 – 1.3357.
Thus, buyers could resume bullish price action and push towards the high end of the zone. Further close above the high end may see more market’s participant pushing towards the vicinity of 1.3418-22. Although, the weekly resistance areas underlined on the chart (zoomed in) could offer attractive exit points for buyers.
It's worth noting that, if the price breaks and remains above the neckline of double bottom pattern (reversal pattern) i.e. above 1.3382, this suggests USD/CAD could rally towards 1.3670 or above on the long run. In that scenario, the trading zones with the weekly resistance levels marked on the chart should be monitored.
That said, a close below the low end of the zone would mean more buyer’s reluctance. This could open the door for sellers to take the lead and press towards the vicinity of 1.3166-59. Yet, the weekly support area and level should be considered.
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USD/CAD four hour PRICE CHART (Nov 6 – DEC 3, 2019)
Looking at the four- hour chart, we notice on Friday USDCAD tested trading above the upper line of pennant (continuation pattern) discussed in our last update. However, the price reverted back to the pattern trading range.
Buyers could retest trading above the upper line. Therefore, a break above 1.3348 could cause a rally towards 1.3382. Nevertheless, the high end of current trading zone discussed above on the daily chart should be watched closely. On the flip-side, a break below 1.3250 could send USDCAD towards 1.3226. Yet, the support level at 1.3235 should be kept in focus.
See the chart to know more about key levels to monitor in a further bullish/bearish move.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi