All trading involves risk. Ensure you understand those risks before trading.
All trading involves risk. Ensure you understand those risks before trading.

USD/CAD Rally Pushes RSI Up Against Overbought Zone

Article By: ,  Strategist

US Dollar Forecast: USD/CAD

USD/CAD rallies for the seventh consecutive day to push the Relative Strength Index (RSI) up against overbought territory, with a move above 70 in the oscillator likely to be accompanied by a further advance in the exchange rate like the price action from earlier this year.

USD/CAD Rally Pushes RSI Up Against Overbought Zone

USD/CAD cleared the September high (1.3848) after showing a limited response to the negative slope in the 50-Day SMA (1.3598), and the exchange rate may continue to register fresh monthly highs as it extends the series of higher highs and lows carried over from last week.

 

With that said, USD/CAD may attempt to further retrace the decline from the August high (1.3947) as it marks the longest rally since July, but the Relative Strength Index (RSI) may show the bullish momentum abating if it struggles to push above 70.

USD/CAD Price Chart – Daily

Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView

  • USD/CAD continues to carve a series of higher highs and lows to register a fresh monthly high (1.3775), with a break/close above the 1.3810 (161.8% Fibonacci extension) to 1.3850 (50% Fibonacci extension) region raising the scope for a move towards 1.3900 (50% Fibonacci extension).
  • A breach above the August high (1.3947) opens up the 2022 high (1.3978) but the bullish price series in USD/CAD may start to unravel if the Relative Strength Index (RSI) fails to mirror the behavior from earlier this year and holds below 70.
  • Need a move below 1.3700 (38.2% Fibonacci extension) to bring 1.3630 (38.2% Fibonacci retracement) back on the radar, with the next area of interest coming in around 1.3520 (23.6% Fibonacci extension).

Additional Market Outlooks

Australian Dollar Forecast: AUD/USD Bearish Price Series Persists

USD/JPY Defends Post-NFP Reaction with CPI Report in Focus

NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

GBP/USD Vulnerable on Close Below 50-Day SMA

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

© City Index 2024