Canadian Dollar Forecast: USD/CAD Rally Continues from Key Support
USD/CAD has shown a clean technical backdrop of late and for USD bulls, USD/CAD presents a compelling case for continuation.
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Canadian Dollar, USD/CAD Talking Points:
- USD/CAD remains as one of the more attractive major pairs for USD strength as the pair posed a pullback to support at prior resistance following the late-July break of the ascending triangle formation.
- I looked at an updated setup in the Tuesday webinar and the shorter-term Fibonacci retracement remains in-play, with price currently testing the 23.6% retracement of that move.
USD/CAD is at a fresh high this morning following the 50% pullback of the prior rally. As looked at in the webinar, that 50% pullback comped well with the USD pullback which had clawed back more than 61.8% Fibonacci retracement of the same relevant move. This made USD/CAD look attractive for USD-strength scenarios and despite the fact that the USD set a fresh lower-low yesterday, USD/CAD held a higher-low at a critical spot on the chart.
And now as we have a bump higher in the USD on the back of this morning’s PPI data, USD/CAD has rallied from a key zone of support around the 1.3750 zone – the same that set horizontal resistance for the ascending triangle – and bulls have an open door to make a stronger push.
USD/CAD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/CAD Shorter-Term
The shorter-term chart of USD/CAD shows a strong move off of 1.3750, but it also highlights some bullish structure that can be worked with for those looking to themes of USD-strength continuation. Price right now is trading through a notable level at the 23.6% retracement at the 1.3808 level and that can be difficult to chase. So, there could be two ways forward with that: If we do see a run directly into the next level of 1.3836, the 23.6% level can be looked to for higher-low support. Or, alternatively, if we do see the move soften in short order, that becomes a barometer of sorts to illustrate bullish control, and in that case, there’s deeper support potential at the 1.3798 swing and then the 38.2% retracement at 1.3763.
If buyers are unable to defend 1.3750, then the higher-low would be in question and that would further bring question to continuation potential in both USD/CAD and US Dollar strength scenarios.
USD/CAD Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Strategist
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