USD/CAD: Another Wave Lower as Assault On Support Continues

The USD/CAD continues to maintain its bearish attack on important support levels, which have proven vulnerable.

Another strong move lower within the USD/CAD was demonstrated in yesterday’s trading. The USD/CAD is now near support levels it last tested in 2015. The bearish trend within the Forex pair continues to prove strong and has been able to assault support levels and prove them vulnerable.

As of this writing, the USD/CAD is trading near the 1.20200, having reached a low of nearly 1.20150 earlier. The 1.20000 level is clearly within sight and some traders may suspect this ratio will be tested sooner rather than later.

Technical traders who are lusting for the potential of speculative higher reversals to suddenly emerge should be careful, because while natural cycles are bound to arise the trend certainly remains bearish. Five-year charts are not long enough to try and predict the value of the USD/CAD from a technical perspective. The last time the Forex pair traded its current values with any seriousness was actually in December of 2014. Yes, the USD/CAD did see the 1.20200 marks in May of 2015, but reversals higher did occur and moves below this value proved fleeting.

The USD/CAD may continue to foster speculative bearish momentum based on the red-hot commodity market. Fundamentally, the simple fact that Canada is a major exporter of physical resources including oil, metals and agricultural goods may keep the USD/CAD rather bearish as long as inflation continues to creep into commodity prices. Technically, the USD/CAD has traded below the 1.20000 mark before and, if and when this ratio is punctured lower, traders may believe that the 1.19000 level could be the next big test.

However, before selling the USD/CAD speculators need to understand the rapid pace the Forex pair has produced since the third week of April. After hitting resistance near the 1.26400 level on the 21st of April, the USD/CAD has steadily moved lower. Forex is seldom a one-way avenue and traders who want to pursue the bearish momentum within the USD/CAD should make sure they are using their risk management appropriately.

Cautious traders may want to wait for moves higher towards short-term resistance levels to initiate their selling positions of the USD/CAD. Traders should also make sure they do not become overly greedy as they target lower marks, and be careful to cash in winning positions if they develop instead of watching them evaporate. Selling the USD/CAD still looks like the logical speculative decision in the short term, but traders should be ready for the potential of reversals.

Canadian Dollar Short-Term Outlook:

Current Resistance: 1.20600

Current Support: 1.20000

High Target: 1.21330

Low Target: 1.19700

USD/CAD

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.