On Saturday, I discussed how USDCAD closed the early March gap.
The March 10th breakaway gap started the pair’s impressive 1,200 pip rally that took just nine trading days.
However, USDCAD surrendered much of that bullish momentum between the 20th and 27th of March.
The next few weeks went on to form a wedge pattern.
As you may know, I was interested in playing a break higher from that consolidation, but it never materialized.
Instead, USDCAD gave up the 1.3860 support level on May 26th and never looked back.
But with the early March gap closed, there’s little reason to be a seller, at least in the short-term.
We’ve seen USDCAD bounce aggressively from the 1.3330 to 1.3420 support area this past week.
Thursday’s 219 pip rally was particularly impressive.
So, does this set the USDCAD up for a push higher next week?
If buyers can hold onto the 1.3560/70 area today, I think there’s a good chance we see higher prices next week.
Notice how Thursday’s close put the pair back inside the descending channel that began in late March.
If this pattern is still significant, we should see a bullish reaction at 1.3560/70.
A daily close below 1.3560 would suggest that either this channel is no longer playing a role or that buyers have failed to step in.
Either way, I won’t be interested in a sub 1.3560 close on Friday.
A close above this new support area would keep the door open for a push into the 1.3860 next week.
Disclaimer: I hold a USDCAD long position from 1.3556, as announced in the member’s area at the time of entry.