USD/CAD: Canadian Dollar Still Strong While Testing Support

Robert Petrucci

A test of important lower values last week sparked a reversal higher in the USD/CAD, but trading has stabilized and support is being approached again.

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The USD/CAD has been within the midst of a long-term bearish trend. The Forex pair is still near a value range it has not heavily contested since the spring of 2018. In mid-December, the USD/CAD tested important lower values and then experienced reversals higher. Last week saw another battle of lower values emerge with yet another reversal higher.

Speculators may suspect that we have not seen the last of support levels being tested. The Canadian dollar continues to look strong and remains an attractive bearish pursuit via the USD/CAD. Holiday trading volumes need to be taken into consideration by speculators short term, because results may not match expectations due to a lack of financial institution participation in the coming days. However, the current support level of 1.28320 does remain in focus.

Traders should be careful not to over-leverage their positions short term because there is reason to be wary of sudden spikes which can emerge due to less than full volume. There is a technical notion that resistance levels near the 1.28600 may prove to be adequate if traders have the fortitude to wager on the bearish trend using rather nearby levels above as stop loss ratios.

The lighter than normal volume the next two trading days in the USD/CAD could make for very quiet trading and an opportunity to take advantage of small trends, but to accomplish this, speculators will need to be very attentive and hope that sudden gyrations do not occur. Technical trading can certainly be pursued with the USD/CAD short term, but traders need to also note that the market is susceptible to the potential of rather strange and unexplained moves due to the possibility of a large transaction being made by a financial house that causes a momentary reaction due to unbalanced Forex orders.

Selling the USD/CAD continues to look like the favorable trade. From a risk/reward scenario, it appears technically like the biggest moves will occur via the long-term bearish trend which remains a dominant feature of the USD/CAD. Traders should be on the lookout for sudden bursts of movement followed by calm which can make conditions sometimes choppy during the holiday season.

Canadian Dollar Short-Term Outlook:

  • Current Resistance: 1.28600
  • Current Support: 1.28320
  • High Target: 1.29110
  • Low Target: 1.27800

USD/CAD chart

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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