Daily Price Action
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USDCAD Buyers Struggle to Move Higher From 1.3120

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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The USDCAD tested a key trend line support on July 9th and again on the 11th. We looked at this area last week as well as in yesterday’s weekly forecast.

For now, there isn’t much to do here in my opinion. As I mentioned on Sunday, I don’t want to buy the pair while below the 1.3260 resistance area nor do I want to buy it while above trend line support.

However, I do want to discuss yesterday’s price action and the implications that could arise from it.

As you may well know, frequent tests of key levels aren’t always a good thing. If a market is struggling to move higher or lower from a critical area of support of resistance respectively, it could indicate an imminent breakout.

In the case of the USDCAD, I’m referring to the confluence of support at 1.3120. So far, buyers have struggled to gain any meaningful ground from this area.

The July 11th rally was a start, but the momentum petered out within hours of the July 12th session. In fact, the pair only managed to break the high on the 11th by a few pips before falling back to the 1.3120 support area.

Now, this is not to say the USDCAD will drop from here. It could go either way, so it’s important to plan for both scenarios regardless of whether you’re long or short. And if you’re flat, it’s times like this that I like to sit back and wait.

Overall, I have to stay slightly bearish the USDCAD while it’s trading below that 1.3260 area. It’s going to take a lot more than last week’s price action to reverse the late June breakdown.

A daily close below 1.3100/20 would present a selling opportunity for a move to 1.3010 and perhaps 1.2870. Alternatively, a daily close at 5 pm EST above the 1.3260 region would turn our attention higher.

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USDCAD trend line support

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2 comments
Hatinder says

Thank you I was looking forward for your views on Usd Cad because it was looking so confusing on charts
Many thanks for clarity
Rgds

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Joel says

Good one Justin!
Stay warm.

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