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USDCAD Enters New Range Following Break Below 1.3120

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

Click here to get access to the same charts I use.

USDCAD sellers cleared a significant area yesterday. The confluence of support at 1.3120 helped to prop up prices at the end of last week. Even the 130 pip drop on July 20th couldn’t punch through the 1.3120 area.

Yesterday’s 1.3045 close changes everything. The 1.3120 region is now resistance, and the pair is catching a slight bid just above 1.3010 as I type this.

But this breakdown should be no surprise to readers. I first pointed out the idea that the USDCAD could begin to struggle in the July 1st weekly commentary.

It was the false break above the ascending channel top (19th – 28th of June) that gave it away. I’ve since written about a potential decline several times in recent weeks, including last Friday’s commentary.

As I mentioned above, the pair is now at risk of further losses. While 1.3120 is the key resistance level to keep an eye on, there is also reason to watch the 1.3065 area.

Personally, I wouldn’t short the pair down here given the distance between today’s price and the 10 and 20 daily EMAs. I’d rather wait for either a retest of 1.3120 as new resistance or a daily close (New York 5 pm EST) below the 1.3010/25 region.

If you’re struggling to find a favorable entry here, the GBPCAD could be a proper alternative, particularly if you’re bearish the pound. Be sure to visit yesterday’s post for more on the 1,500 pip reversal pattern that may confirm within the next day or two.

As for the USDCAD, I do think we could see an extended move lower over the coming weeks. The lower level of the ascending channel that extends from the September 2017 low could make for a prime target. That level comes in between 1.2550 and 1.2600.

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USDCAD key daily levels

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8 comments
JohnKamau says

Am very new in trade am still learning

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Shane says

Justin, the technicals you share on this pair make some sense from a long term perspective, but currently on the daily chart the candles are resting on the 50EMA and still above the 200EMA. As well as this pair trading at a -54% correlation to EURUSD which is undecided in direction but is possible could show dollar strength after tomorrow’s US GDP and today’s continued EUR direction. Point being, I still see this pair as a bullish pair even at this level.

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    Justin Bennett says

    Everyone is entitled to an opinion. Best of luck.

    Reply
Dilshod says

Thank you Justin

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    Justin Bennett says

    You’re welcome.

    Reply
Felix Great says

Thank you Justin. I appreciate. God bless you.

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    Justin Bennett says

    My pleasure.

    Reply
peter says

u are correct justin…usdcad.will.target 1.255 from.now…and.will.subsequetly reach 1.2 as a final.target. the whole.journey might take weeks though…this is possible as crude is heading as.high as 100..cheers!

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