CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Canadian Dollar Short-term Outlook: USD/CAD Bulls Brace for BoC

Article By: ,  Sr. Technical Strategist
Yesterday 6:42 PM

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

  • USD/CAD attempting third weekly advance- bulls stall at major technical resistance
  • Bank of Canada interest rate decision / US CPI on tap- risk for major inflection ahead
  • Resistance 1.4189-1.42 (key), 1.4310, 1.4350/57- Support 1.4085, 1.4005, 1.3978/90 (key)

The US Dollar has rallied more than 1.3% since the start of the month with the late-September rally testing major technical resistance today. The focus now shifts to major event risk tomorrow with the US Consumer Price Index (CPI) and the Bank of Canada interest rate decision on tap. Battle lines drawn on the USD/CAD short-term technical charts.

Canadian Dollar Price Chart – USD/CAD Daily

 

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In last month’s Canadian Dollar Short-term Outlook we highlighted the threat for a deeper pullback in USD/CAD after price exhausted into confluent resistance and that, “Ultimately, losses would need to be limited to 1.3881 for the September uptrend to remain viable with a close above 1.4089 needed to mark uptrend resumption.” USD/CAD briefly registered an intraday low at 1.3927 before rebounding sharply higher with the advance stretching into confluent resistance today at 1.4189-1.42- looking for a reaction here with the immediate advance vulnerable while below.

Canadian Dollar Price Chart – USD/CAD 240min   

 

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Notes: A closer look at Canadian Dollar price action shows the USD/CAD continuing to trade within the confines of the ascending pitchfork we’ve been tracking off the September/October low. Note that the upper parallel further highlights resistance into the 1.42-handle and the focus is on a possible inflection off this threshold over the next few days.

A topside breach / close above would likely fuel another accelerated advance towards subsequent resistance objectives at the 61.8% extension of the 2021 advance at 1.4310 and the 88.6% retracement of the 2020 decline / 2020 high-week close (HWC) at 1.4350/57. Both level of interest for possible topside exhaustion IF reached.

Initial support now rests back at the 78.6% retracement at 1.0485 – a break below the median-line would threaten a larger correction within the broader September uptrend towards the objective monthly open at 1.4005 and 1.3978/90- a region defined by the 2022 high and the 2020 March weekly reversal close. We’ll reserve this threshold as our medium-term bullish invalidation level and a close below this pivot zone would suggest a more significant high was registered this week / a larger trend reversal is underway. Next major support consideration rests with the 2022 high-close / 2023 high at 1.3881/99.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024