The past five days of trading within the USD/CAD have seen choppy conditions, but bearish momentum continues to prevail.
The USD/CAD has tested speculators’ short-term trading endurance with choppy conditions, but the long-term bearish momentum within the Forex pair continues to prove powerful. As the USD/CAD has begun to trade after the weekend, technical charts demonstrate that long-term support is being challenged. Perhaps due to the vicinity of the price range the USD/CAD is traversing, the past five days have proven rather turbulent with strong reversals prevalent as new lows cause a reaction.
It is clear that the 1.260000 level is the focus for short-term traders today as the support level has seen tests technically. However, after puncturing below the important psychological depth, the USD/CAD has seen a slight climb higher and, as of this writing, is near the 1.26390 mark. Financial institutions are likely looking at the USD/CAD with bearish sentiment in mind considering the fundamental strength in the energy sector and other commodities.
If the USD/CAD is able to prove that its short-term resistance levels are capable and hold near term, this could be a significant indicator that further downside action will develop. The junctures of 1.26480 to 1.26690 should be monitored by speculators. If the value of the USD/CAD is able to sustain its price below these levels, it will be a technical indicator that late last week’s surge downward could prove durable and a new testing ground might develop.
The USD/CAD is a major Forex pair with plenty of transparency and traders need to understand that the amount of leverage they use within the pair is important. Small moves within the USD/CAD can carry significant risk if trading positions are not managed carefully. Last week’s trading shows that fast reversals higher remain a danger for speculators who want to pursue the long-term bearish momentum.
However, continuing to sell the USD/CAD appears to be the logical decision. Global risk appetite is strong, but cautious traders may remain skeptical about the abundant momentum many assets are exhibiting. The USD/CAD appears to have technical evidence which suggests further movement downward will prevail. The fact that the USD/CAD is now approaching values it has not traded since April of 2018 is intriguing. Traders looking to short the Forex pair near term need to remain patient and can use limit orders which target resistance levels as places to enter their selling positions while hoping bearish sentiment is reinforced.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.26480
Current Support: 1.26055
High Target: 1.26690
Low Target: 1.25810