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