USDCAD is breaking out of a massive triangle pattern I’ve mentioned several times.
We looked at the pair on January 13th as it was coming off of the 1.3300 support that dates back to July 2021.
That area triggered a bounce after a couple of retests.
Then on Wednesday, we saw USDCAD close the day above the 1.3535 resistance level from October.
Bulls managed to hold the level on Thursday, and USDCAD tested that 1.3535 area as support again today before a significant rally.
So far, USDCAD is forming a base above that former resistance level.
We discussed this breakout yesterday in the Daily Price Action community, which is playing out nicely so far today.
The next resistance area to watch is the December highs at 1.3700, followed by the top of the triangle at 1.3880.
However, remember to also keep an eye on the US Dollar Index (DXY).
We saw the DXY break the 105.00 resistance today, but it’s still below the daily pivot at 105.60.
That means dollar bulls will have to deal with 105.60 resistance next week.
It also means we could get a pullback from pairs like USDCAD if the DXY tests 105.60.
But as long as USDCAD holds above the 1.3520 region next week on a daily closing basis, the next key resistance is 1.3700.
Alternatively, a daily close back below the October trend line at 1.3520 would confirm a fakeout and send the pair back to the 1.3320 support.