FOREX Chart Of The Day: USDCAD What Next?
Is USDCAD still on your watchlist?
We reveal why it should be and what we expect to see happen next on the major forex pair
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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Again, we’re going to take a look at USD/CAD. Last week, we spoke about this potential move forming on the weekly timeframe, and we’re going to revisit that as the price is still hanging around that key area of support, and we’ve got a bit more confluence to back it up now.
We can see that this week the US Dollar has gone and continued to be in that reversal area, and the CA Dollar has continued to weaken, which is what you want to see. If we’re looking to buy USD/CAD, we are looking for the US Dollar to reverse and gain strength, and we’re looking for the CA Dollar to lose value, which is exactly what we’re seeing, here on the market, at the moment. Especially with the US Dollar at this key reversal area. We want to be looking for the potential for the market to continue to the upside.
Now, we’re looking at the weekly and how it closed last week. We’re looking at how the market would close around this 1.28. So, we’ll pop that level back in, through here, and we’re looking to see how the market reacted because if we look to the left at this zone, we can see that the market has reacted in this area quite often in the past, whether it would be as a resistance level or as a support level. Now, the market has retested this structure. What we looked at was the fact that we’re in this oversold condition, and we looked at previous oversold conditions on USD/CAD, and that it typically sees the market rally up into an area of resistance. So, if we were marking this up, we would say: “Well, we’re finding support in here now. Where is the next point of resistance?” The next point of resistance for me is around 1.2976, all the way into the 1.3 zones, through here. Again, we’re highlighting the fact that the market has been around this area before. It has found various support and resistance from this point, here. So, is the market going to retrace this impulse and head back towards this level of resistance to either continue the trend? Or reverse the trend to the upside?
So, 1.3 is a big level on USD/CAD, we could expect the market to retest this level. Now, how can we trade that? Well, it’s really important to look at the midterm trend, and we like to take a look at the four-hour timeframe to gauge that trend and see how the market moves.
Now, last week we looked at this double bottom pattern that was potentially forming in here, and the market didn’t actually complete the pattern in the end. It continued to move sideways, it then broke to the downside. The pattern would have been complete if we had that higher high higher close. We could have then traded the neckline for that pullback move, through here. However, the market is forming another double bottom pattern a little bit lower down, and if we’re going to see this pattern complete, we would need to see the price break and close above 1.2792. If the price breaks this area here, it gives us two successful higher high higher closes, then that will signify a change of momentum, here, a change of trend, and we’d look for the market to retest that neckline area to trade back up into this resistance zone.
So, keep an eye on USD/CAD this week. Again, last week we were waiting for that breakout. I didn’t quite get it. We’re looking pretty more promising this week, especially with that weekly indecision close. If we get any pullback here, look for targets around 1.3 level of resistance.
Thanks for watching and I’ll speak to you soon.
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