Today I’m going to show you my long-term target for USDCAD, and where I want to buy the pair following this week’s volatility.
I’ll also share an update on the US Dollar Index, the DXY.
Watch the video below and scroll down for the annotated charts and analysis.
I first discussed the potential for a multi-month and even a multi-year rally for USDCAD back in July.
Even then my longer-term target was the multi-year range highs at 1.4670.
Since then, the USDCAD has broken free from a massive triangle pattern with an upper level that extends from the March 2020 COVID high.
If the US dollar can remain firm following this Wednesday’s Fed rate decision and Friday’s non-farm payroll, we could see USDCAD extend even higher.
My longer-term target for the pair remains the 1.4670 multi-year range highs.
It’s the same target I’ve had since USDCAD was bouncing from the 2021 trend line support in July.
However, USDCAD hit resistance on Friday at 1.3860.
It’s still hovering around this area today, but 1.3860 is a key level that dates back to the April – May 2020 consolidation.
The level served as support for several weeks before failing and opening up a much more significant correction for USDCAD.
With the pair trading at resistance, now is not the time for longs, in my opinion.
Traders also have to be cautious this week.
Not only do we have FOMC on Wednesday and NFP on Friday, but Monday and Tuesday are the last two trading days of October.
The final 24 to 48 hours of trading for a month tend to be more erratic and volatile than usual, as many of the big players close out their books for the month.
The combination of events should make for a volatile week for a pair like USDCAD.
One area I’ll be watching closely is 1.3770.
That’s the 50% of last week’s breakout candle, and the 50% of last Wednesday’s rally that has yet to be retraced.
Large green candles like Wednesday’s often leave behind significant pockets of liquidity, which can serve as magnets for price.
In the bigger picture, I’ll remain bullish on USDCAD while above 1.3650 on a weekly closing basis.
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