USDCAD: At a Crossroads

Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.

 

 

The recent downgrade of the US is sure to have ripple effects in the market, and the Usdcad, which is trading at a critical level, is a good candidate to measure just how consequential its effects will be. Last week saw a rally off weekly .9440 low and trendline support. This is potentially a significant development, as double bottoms are usually a strong reversal signal.

 

A look at the daily chart reveals a key resistance at .9800 down trendline, which is just below .9920 horizontal resistance line on the weekly timeframe. This resistance, in my opinion loses. The potential for this resistance to hold and for bears to regain control is threatened by the daily channel support line which was breached and retested on Friday. Therefore, any pullback from current levels will need to breach that .9740 channel line for further downside to follow.  For the coming week, .9800 will need to be watched for signs of breaching, in which case, the channel resistance line at .9900 will be the next level that the bulls will have to break, followed by .9920 in order to attain 1.0100 and beyond. To the downside, a re-breach of the channel support line might result in a retest of .9590 congestion zone, and if the bears mean business we could well see a gradual channeling through the weekly lows, as the market tends to do when attempting to break significant support/resistance levels.

 

One way or the other, I think the usdcad will be interesting to watch in the coming days and week, and is sure to offer some good trading opportunities. As it remains above .9700, I am bullish in my outlook.

Thanks for reading, and enjoy the rest of your weekend!

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