Daily Price Action
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USDCAD Breaks Key Resistance, Targets 1.2770

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The USDCAD closed above a significant level on Wednesday. The 1.2420 handle is the July low and is also an area that played a key role as support between January and April of 2015.

With yesterday’s close of 1.2477, any retest of the 1.2400/20 area as new support will likely encounter an influx of buying pressure.

However, there is also a second break that occurred in the last 24 hours.

Following the mid-August rejection from 1.2770, the USDCAD began forming a downward sloping flag. Although somewhat rare, sloping flags can produce some of the best setups.

Because they tend to occur at significant turning points, the reward is often well worth the risk. That’s certainly the case with the USDCAD given that the next resistance at 1.2770 is a considerable 300 pips above current prices.

The plan from here is straightforward. Any retest of the 1.2420 area as new support could produce a favorable buying opportunity. I’m going to stand aside and let the pair mean revert before watching for bullish price action from the 1.2420 area.

As long as buyers keep prices above the 1.2420 mark on a daily closing basis, 1.2770 is the target. Alternatively, a daily close (5 pm EST) back below 1.2420 would negate the short-term bullish outlook.

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USDCAD daily time frame showing bullish breakout

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14 comments
Howard says

Thanks Justin for the heads up. Just noting that there could also be some resistance at 1.26, being the round # at previous swing high.

Reply
    Justin Bennett says

    Perhaps. My target for these patterns is always the swing point started the formation.

    Also note that the distance from 1.2060 to 1.2420 is nearly identical to the distance from 1.2420 to 1.2770. Range play.

    Reply
Khurram says

Dear Justin,
Good day!
Would it be more convenient for your students/learners if you also suggest best range to Buy & Sell along with TP and SL figures in your every post enabling traders/learners to get more understanding and put your advise into practical way easily ?
Best regards,
Khurram Saab

Reply
    Roy Peters says

    If I may say. Justin has many articles for free on this website about take profit ideas. Which have helped me greatly.

    Reply
      Khurram says

      Yes, good ideas are given in general way. I’m requesting him if possible to give Buy/Sell trade advice daily for each of pairs he is expert in.

      Reply
        Justin Bennett says

        No, I don’t believe in signal services as a learning tool which is why my platform will never become one.

        Reply
Tims says

Thanks Justin. Great insight

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Farai says

Thanks justin for the heads up.

Reply
    Justin Bennett says

    Anytime, Farai.

    Reply
Stuart says

Nice one Justin.That level (1.24000) became more significant too, as it was also a “supply zone” caused by the surprise interest rate hike by Canada (As Im sure you know). Now that it has had a strong move and solid bullish daily candle close above it, it should act as solid support. I often find that these supply/demand zones when broken become great role reversal levels to trade from (with price action signals)

Reply
    Justin Bennett says

    Hi Stuart, you got it. We’ll see how the market reacts if the 1.2400 area comes under pressure over the next 24 to 48 hours. Cheers.

    Reply
Raymond says

Thanks Justin. However, I’ll love to know how many candles is sufficient to confirm a retest. If price test the 1.2400 line as support and forms a candle, will that be sufficient?

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Linda B. says

If you connect the wicks at the upper trendline, there is no break of resistance. Why have you favoured the bottom trendline instead?

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