USDCAD has set a new high for 2017 on Tuesday, April 25, 2017. In the London session USDCAD hit a high of 1.3570. The CAD begun the week on the back foot as it has lost ground against its counterparts apart from the NZD. As USDCAD spikes to higher levels, it currently hovers beneath a key resistance. Let’s look at the possibilities on USDCAD Technical Analysis as price approaches key level.
25 April, AtoZForex – USDCAD has been on a long, sustained uptrend which has lasted several years. The oversupply of crude oil has only but weakened the CAD further. However since early 2016, price began correcting downwards. From January 17, 2016 to May 1 2016, USDCAD crashed 2,200 pips to the 2016 low at 1.2250.
Since then, price moves has been limited within a wedge as the upper and lower bounds limits movements. Price is currently trading very close to the 1.3580 key level. Whatever happens at that level could determine if we will see a rally or a dip on USDCAD.
USDCAD Technical Analysis as price approaches key level: Possible scenarios
There are two possible ways that USDCAD would play out. The first possibility is that we may see a breakout if the bulls finally take charge. The other is that price could target the lower bound of the wedge if the 1.3580 key resistance holds once again.
If we get a bounce off the resistance level on USDCAD, price could continue moving within the wedge as shown in the chart above. The wedge support is at the 1.3150 psychological level, 400 pips below the price. It will also mean that a triple top formation has formed as the 1.3580 level has already resisted further rally twice.
The other possibility if we get a breakout is that we would continue to see fresh 2017 highs. Price recently bounced off a 3 year old ascending trend line and has rallied ever since. An inverse head and shoulder formation will also be completed if price beaks the neckline. If that happens, price may target the 61.8% fibonacci resistance at 1.3838.
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