The USDCAD is going through some much-needed consolidation.
Following a 1,150 pip rally that started with the March 9th gap up, the USDCAD has given back 750 pips.
At least that was the situation as of Friday’s low.
Today’s session has the USDCAD higher by 140 pips after a gap up to start the week.
Buyers are also testing that 1.4150 key level.
Notice how 1.4150 is the March 20th low and very close to Friday’s high of 1.4153.
So far, the USDCAD has secured a 4-hour close above that level.
But the real test for bulls will be today’s close at 5 pm EST.
If you’ve followed me for a while now, you know I use the New York close at 5 pm EST to confirm breaks.
If we see the USDCAD close today above 1.4150, that area will flip to support.
Key resistance above that comes in at 1.4300, which intersects with the top of a short-term descending channel.
Given the parabolic move earlier this month, this channel appears to be a bull flag pattern.
That said, buyers need to secure a close above channel resistance to confirm the pattern.
Until that happens, the USDCAD consolidation will continue.
A close above channel resistance between 1.4300 and 1.4350 would not only confirm the breakout, but it would also expose the measured objective.
Now, there are a couple of ways to measure an objective here.
The first would be to use the low of the March 9th breakout candle.
That would give us a 1,150 pip objective. And if we assume Friday’s low holds, that puts the target just above the 1.5000 handle.
Another option is to use the February 21st low or even the current 2020 low as the start of the flag pole.
Those two lows would give us objectives of 1,450 pips and 1,720 pips, respectively.
For now, though, it all comes down to whether or not buyers can close the pair above 1.4150, and eventually take out that 1.4300 resistance area.
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