USD/CAD surged on Monday, breaking above the 1.3260 resistance (now turned into support) territory, thereby confirming a higher high. That said, after hitting resistance at 1.3346, also marked by the high of August 12th, the pair entered a consolidation mode, staying between that hurdle and the 1.3283 support. Overall, USD/CAD keeps trading above an upside support line drawn from the low of September 1st, as well as above all three of our moving averages on the 4-hour chart, and thus, we would consider the near-term outlook to be positive for now.
If the bulls are strong enough to take the reins again, we may see them overcoming the 1.3346 barrier soon, and perhaps pushing the battle up to the 1.3397 zone, defined as a resistance by the high of August 7th. They may decide to take a break after hitting that zone, thereby allowing the rate to correct lower. However, as long as it would stay above the upside line, we would see decent chances for another leg north, and perhaps a break above 1.3397. If so, the next target for the buyers may be the 1.3450 area, marked by the high of August 3rd.
Shifting attention to our short-term oscillators, we see that the RSI lies slightly below 70, and has just ticked down, while the MACD, although positive, shows signs that it could soon fall below its trigger line. Both indicators detect slowing upside speed and suggest that a small retreat may be in the works before the bulls decide to retake control.
In order to abandon the bullish case and start examining the prospect of strong declines, we would like to see a break below 1.3210. This move would also take the rate below the pre-mentioned upside support line, and it may encourage the bears to shoot for the 1.3137 zone, marked by the low of September 18th, or the 1.3117 barrier, marked by the low of September 10th. If the latter level is not able to stop the slide and then breaks, the next stop may be near the 1.3075 area, which is defined as a support by an intraday swing low formed on September 7th.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.25% of retail investor accounts lose money when trading CFDs with the Company. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the full Risk Disclosure.
Copyright 2020 JFD Group Ltd.