The USDCAD closed above a critical area on Wednesday.
The region just above 1.3300 is the intersection of the top of two prominent channels.
First, let’s take a look at the descending channel that extends from the 2016 high.
Here’s a view of it from the weekly time frame:
Notice how the USDCAD has been “hugging” the top of that channel since the start of last year.
As I often say, constant pressure on a key level is usually a sign of an imminent breakout.
The top of the weekly channel above comes in at 1.3315, or about 50 pips below the price as of this writing.
Now let’s take a look at the second channel in play.
The second pattern extends from the September 2019 high and comes in around that same area of 1.3315.
Wednesday’s 1.3334 close put USDCAD above both of those channels on a daily closing basis.
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That 1.3334 close means that the 1.3315 area is new support.
I even mentioned this new support area fifteen hours ago in the member’s area.
It’s no coincidence then that today’s low is 1.3316.
So, where is USDCAD going from here?
As long as the 1.3300 area remains intact as support on a daily closing basis, I favor a higher USDCAD, perhaps toward that 1.3650 resistance area.
Keep an eye on 1.3380 and 1.3530 as well, though.
1.3380 is the 50% retracement of the 2016 to 2017 range and has also triggered a few reversals since June 2018.
Alternatively, a daily close back below that 1.3300 handle would likely negate the bullish outlook.
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