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USD/CAD Technical Strategy: Favorable Risk: Reward To Establish Long
Time Based Correction Means Sideway Chop Could Continue
Long Bias Invalidated on Break And Daily Close Below 1.3115 (Less than 100 pips)
The Canadian Dollar has been unable to catch a bid as the highly correlated Oil market fails to break resistance both pushing USDCAD higher longer-term. As USDOLLAR momentum has also slowed after a recent surge, USDCAD has moved sideways and overlapped prior price action. However, the 34 day moving average around 1.3145, has held as support and a continuation of this support favors a push higher towards Fibonacci Expansion targets of 1.3453/1.3525.
USDCAD continues to trade within a large range of 1.3150, the Sept. 9th low to 1.3350, the Aug 25th low. A support zone of the Sept. 3rd low at 1.3137 through the Sept. 8th low at 1.3185 keeps the focus higher. A break below that zone alone would turn the focus lower and perhaps significantly so. The current high of 1.3350 falls nearly 100-200 pips short of a significant resistance zone (1.34/36) although it’s worth noting we could be forming a rising wedge that would take us higher towards 1.3600.
Below the 34-day moving average at 1.3145, trend structure support is currently at 1.2950. The 5-day ATR of 107 pips provides a decent amount of volatility to trade the range until a breakout appears. Currently, Fibonacci retracement support continues to allow short-term value buyers a zone to take a percentage of the ATR from USDCAD.
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