The USDCAD reached a critical resistance area on Friday. However, even from the daily time frame, the 1.3100 area is rather unsuspecting. It isn’t until we draw a certain channel that we realize why the pair might struggle at current levels.
Note how the USDCAD is testing ascending channel resistance that extends from the October 2017 high. To be clear, a mere retest such as this does not justify a short position, at least not for me.
Instead, I’ll need to see bearish price action at 1.3100 to get short. Until that time, I’m just a bystander.
However, there is a second ascending channel I’m keeping an eye on. This one is best viewed from the 4-hour time frame.
Notice how the two lows from the 1st and 16th of February and the highs from February 9 and March 5 have carved an ascending channel. Since that March 5 retest, however, the pair has been erratic and hasn’t really conformed to this pattern.
We also have a key horizontal support not far from today’s price at 1.30. This will be another battleground for buyers and sellers. In fact, I’m hesitant to sell the pair at all as long as prices remain above 1.30 on a daily closing basis.
As you can see, there are multiple ways to play the USDCAD. Bearish price action on the daily chart near 1.3100 could offer a short opportunity, as could a close below 1.30 or this 4-hour channel.
Alternatively, a daily close above the 1.3100 region would take us to 1.3210.
This post isn’t intended to point out a particular setup, but rather give you a few key levels and patterns to keep an eye on as things progress.