Technical Analysis – USDCAD holds a bullish bias but strong resistance awaits near 2-month high

Technical Analysis – USDCAD holds a bullish bias but strong resistance awaits near 2-month high

Technical Analysis – USDCAD holds a bullish bias but strong resistance awaits near 2-month high

Christina Parthenidou, XM Investment Research Desk

USDCAD has gained little this week but it managed to hold above the 20-day moving average (MA) and re-enter the 1.34 area, with the technical indicators feeding prospects for a possible positive short-term trading; the RSI holds well above 50 , while the MACD continues to strengthen in bullish territory and above its red trigger line.  Also, in Ichimoku indicators, the red Tenkan-sen keeps rising higher the blue Kijun-sen. Yet, the pair is facing strong resistance near its previous peak of 1.3466.

A failure to overcome the two-month high of 1.3466 barrier could send the price down to 1.3370, a challenging point over the last three months. Lower, support could be next found around 1.3285 where the 50-day MA is currently positioned, while a decisive close below the 200-day MA (1.3190) could stage a steeper sell-off.

Alternatively, if 1.3466 proves easy to get through, the spotlight will turn to the 1.3540-1.3600 area, a former resistance zone in 2016 and 2017. On top of that, the bulls would need to clear the  19-month high of 1.3663 to push the rally towards the 1.3792 peak, the highest level reached since April 2017.

In the medium-term picture, USDCAD turned neutral after violating the downtrend started from the 1.3663 peak by forming a higher low at 1.3111 and a higher high at 1.3466. Should the market continue the upward pattern, the outlook may turn brighter. A run above 1.3663 would turn the outlook strongly bullish.

 

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