USDCAD is at a key technical juncture...
- USDCAD appears poised for a big move
- Pair has repeatedly struggled at 1.3300 recently
- The 1.3300 area is a major Fibonacci zone
- Rising Wedge patterns usually resolve with a downside break
Chart 1: USDCAD Daily Candlestick
This chart shows that we've recently been struggling every time we get to 1.3300. Yesterday (which was a holiday in both the US and Canada so should be treated with some suspicion) we posted a "Bearish Engulfing Pattern"; a large red candle. This candle has Marabuzo resistance at 1.3237, a level that has so far capped things in overnight trade. The other thing of note on this chart is the short-term uptrend support line at 1.3149 today (moving higher by around 13-14 ticks per day). There is a less steep line on the chart, currently at 1.2917.
Chart 2: Weekly Bar Chart
This chart shows why we keep struggling up at this 1.3300 area; because it's a big Fibonacci level; being 38.2% of the losses from the high back in January. It also says we're forming some sort of "Rising Wedge" formation. This is generally a continuation pattern that resolves with a break to the downside. Generally.
Combining what both charts tell us says we could trade this as follows:
Sell at current levels, asking that we continue to post closes below 1.3237. Stop out and reverse on a close above 1.3312-14. Targets for a short trade are 1.2988-1.3000 once trend support is breached, then the gentler sloping uptrend line for a second target (currently 1.2917).
1.3475, 1.3575 and 138.40 are upside targets if we get stopped and reverse the trade to a long.
– Edited by Clare MacCarthy
Clive Lambert is chief technical analyst at FuturesTechs