USD / CAD technical outlook

  • USD / CAD stuck for weeks at 2017 low
  • Can tighten higher, but could be a tough trade on the long side

USD / CAD Post NFP Technical Outlook & Canada Employment Data

US NFPs showed 559,000 jobs were created in May against 650,000 forecast, while Canada has lost 68,000 jobs from analysts’ estimate of -20,000. So far the USD / CAD shows little reaction to headlines. Make way for technicians …

Looking at the backdrop here, support via the 2017 low has been very influential since the second week of May. All attempts to pull it off over the past week have been thwarted, but at the same time, there has been little progress despite clear sponsorship in terms of long-term support.

There has been a downward slope since June of last year which once served as support, but has recently turned into an increasingly reliable resistance line. A solid crossing of this line, however, can help trigger a rally; the anticipation is that it could be a tough countertrend trade.

Considering the depths from which the USD / CAD trades and the continued downtrend since last year’s high, a complacent crowd can quickly be caught off guard and lead to a steep rise. This could make entrees hard to find unless you are willing to pay in an upward momentum.

Conversely, the rally could be slow, as counter-trend rallies often are. Counter-trend moves are often marked by choppy trading that brings little momentum as the general tides go against it.

On the downside, seeing momentum accelerate below 12006 will have a significant swing-low created in 2015 at 11919. The price is being extended so that it can make any kind of sudden drop into some kind of situation. capitulation. In general, shorts have lost a lot of their risk / reward appeal.

In the short term, traders could use the developing range on the 4 hour chart as a guide for short term trading. The range is fairly defined with a maximum maximum at 12144 and a minimum maximum set at 12006. But again, given the wider scope, the range may only prove to be valid for a short time after a breakout.

USD / CAD Daily Chart

USD / CAD chart in 4 hours

4 hour usd / cad chart

USD / CAD Charts by TradingView

Resources for Forex Traders

Whether you are a beginner or an experienced trader, we have several resources available to help you; tracking indicator sentiment of the trader, quarterly business forecast, analytical and educational webinars held daily, trade guides to help you improve trading performance, and one specifically for those who are new to forex.

— Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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Al Worden

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