On the daily chart below for USDCAD, we can see that after breaking down the 1.3664 support, the market has been on a strong downtrend. Last week though the price has broken out of the trendline and the resistance at 1.3405 and started a strong rally to the upside targeting the 1.3553 level.

The moving averages have crossed to the upside now and the price is about to break above the resistance. This strong rally has started after the US Retail Sales missed expectations across the board and made the market to fear an earlier than expected recession. The commodity currencies Currencies Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the popu Currencies are a typically a form of money in wide circulation, being the primary medium of exchange with respect to buying and selling goods and services. These are often issued by a specific government or collection of governments, by way of paper notes and coins. Other forms of currencies include previous metals such as gold and silver, and digital currencies such as Bitcoin. Currencies serve as a backbone of the country’s or countries’ economy, due to the perception of value held by the popu Read this Term like CAD are the most sensitive to such events.

USDCAD technical analysis

On the 4 hour chart below, we can see that the last selloff to the 1.33 handle was diverging with the MACD, and that is generally a signal of a weakening momentum often followed by pullbacks or reversals. In fact, the price pulled back to the trendline, but after a breakout it continued to rally hinting to a possible reversal in the trend. The buyers are now in control and the moving averages will act as dynamic support for further longs.

On the 1 hour chart below, we can see that the price is trading within a regression channel and with the break above the 1.3553 resistance we can expect the rally to reach at least the 1.36 handle. There isn’t much to do at the moment as the price has already started the rally, but the buyers may want to wait for another pullback to the lower bound of the channel to open new long positions. The sellers, on the other hand, should wait for the price to break below the lower bound of the channel and the 1.3553 level to get the conviction to target lower lows.