On the daily chart below for
USDCAD, we can see that after breaking down the 1.3664 support, the market has been on a strong
downtrend. Last week though the price has broken out of the trendline and the resistance at 1.3405 and
started a strong rally to the upside targeting the 1.3553 level.
The moving
averages have crossed to the upside now and the price is about to break above
the resistance. This strong rally has started after the US
Retail Sales missed expectations across the board and made the
market to fear an earlier than expected recession. The commodity currencies
like CAD are the most sensitive to such events.
USDCAD technical analysis
On the 4 hour chart below, we can
see that the last selloff to the 1.33 handle was diverging with the MACD, and that is generally a signal
of a weakening momentum often followed by pullbacks or reversals. In fact, the
price pulled back to the trendline, but after a breakout it continued to rally
hinting to a possible reversal in the trend. The buyers are now in control and
the moving averages will act as dynamic support for further longs.
On the 1
hour chart below, we can see that the price is trading within a regression
channel and with the break above the 1.3553 resistance we can expect the rally
to reach at least the 1.36 handle. There isn’t much to do at the moment as the
price has already started the rally, but the buyers may want to wait for
another pullback to the lower bound of the channel to open new long positions.
The sellers, on the other hand, should wait for the price to break below the
lower bound of the channel and the 1.3553 level to get the conviction to target
lower lows.
This article was written by ForexLive at www.forexlive.com.
http://dlvr.it/Sn50Rr
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