CAD Technical Outlook
- USD/CAD breaking out of unsustainable range
- Friday breakout could lead to a big rally
USD/CAD Technical Forecast: Range Break Could Lead to Big Squeeze
It has been a rough few weeks trading USD/CAD unless ping-ponging it back and forth within the context of rangebound conditions. On Friday, though, the range started to break to the upside, which could lead to a strong rally as the market is caught flat-footed.
A daily close above 12142 will also have the June 2020 slope taken out and could lead to a squeeze higher as the wrong-way downtrend crowd is caught flat-footed. The first level to watch on a breakout will be the 2018 low at 12246 (minor resistance), followed by the March low at 12365 and a pair of slopes from late last, early this year that are in confluence.
On the downside, should we see the breakout fail and take price below 12006 the 2017 lows will be broken, a level that has forged a floor over the past month. From there we would be eyeing a swing-low created in 2015 at 11919. We would need to keep an eye on momentum at that juncture for signs of whether that will be a minor bump or a significant one.
As we head into the new week it looks like the slow trade might have finally ended and offer up opportunity, whether that is the form of the bullish breakout sustaining, or it failing and leading to a decline back through the other side of the range that could spark bearish momentum.
USD/CAD Daily Chart
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX