USDCAD bulls have cleared the first hurdle at 1.2770. We discussed this level last Thursday when the pair was trading at 1.2745. The idea was to wait and see whether the pair would break above 1.2770 resistance or below trend line support.
Monday’s close gave us the answer. And earlier in Tuesday’s session, it appeared that buyers were back in control and were intent on pushing prices higher.
However, there is another trend line that’s putting the brakes on today’s advance.
The level that extends from the current 2017 high at 1.3792 comes in near 1.2810 and is responsible for the latest slip in prices.
Levels that begin at yearly highs or lows tend to carry more weight than others. They become a pivot of sorts that market participants pay close attention to when determining the likely path forward.
It just so happens that both trend lines shown in the chart above fit that description. One extends from the current 2017 high while the other starts at the current 2017 low.
So, although USDCAD bulls have cleared the 1.2770 handle, it seems this one needs a bit more time to consolidate. That said, the pair has just a few days worth of real estate left in this terminal pattern.
Given the quasi bearish engulfing day that’s forming as I write this, things are looking pretty bleak for USDCAD bulls. Of course, it’s too speculative to call one way or the other until the session closes at 5 pm EST.
A daily close above trend line resistance from the current 2017 high would first expose 1.2915. A break above that would open up the February lows at 1.3000.
Alternatively, a daily close below trend line support that extends from the current 2017 low would expose 1.2590 followed by 1.2420.
Keep in mind that market volume will begin to dry up starting on Wednesday in anticipation of Thursday’s U.S. holiday. As previous years have shown, the drought will extend into Friday’s session, so be sure to take this into account when evaluating any resulting breakouts.
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