The USD/CAD remains near incredibly important long-term support values and has produced a rather steady range the past two days.
The ability of the USD/CAD to sustain its lower values the past couple of days after displaying strong bearish momentum has certainly gotten the attention of speculators. As of this writing, the USD/CAD is exhibiting the capability to trade slightly below the 1.21000 juncture and, if this is maintained, traders who favor the long-term bearish trend of the Forex pair may continue to target values below.
Trading within the USD/CAD produced fast results the past few weeks. On the 21st of April, the Forex pair was trading near 1.26300 briefly. The speed of the decline within the USD/CAD has been rapid, but after hitting its current price vicinity it might prove to be unwise to expect strong firepower downwards when compared to the percentage move made since the third week of April. From a risk/reward scenario, support levels below do look rather durable, but that depends on technical perspective.
The last time the current values of the USD/CAD were traded was in late August and early September of 2017 - this was a one week period. Believe it or not, the time period from the fall in 2014 until late spring in 2015 was the last time the USD/CAD saw a serious amount of trading below its current depths. Technically, the Forex pair is almost in unchartered waters, taking into consideration the difference in economic dynamics compared to nearly six years ago.
Support near the 1.20850 to 1.20700 junctures should be watched carefully; if a challenge of these values develops, it could set off fireworks within the USD/CAD. Until these support levels are approached, traders may want to look for momentary reversals which may transpire while taking advantage of close support and resistance levels. Importantly, however, the fact that the USD/CAD remains within its lower depths without producing a significant – even if briefly – reversal higher may be signaling that there is additional room to traverse lower.
This underscores the notion from a risk/reward scenario that while vital support is being tested and may not appear to have much room to traverse lower technically, it still may actually be bearish momentum which should be pursued. The lon-term trend of the USD/CAD may not be ready to reverse quite yet, and speculating on downside action remains an attractive trading option. Caution should be used, and traders may want to wait for slight moves higher to activate their selling positions which target support levels below.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.21130
Current Support: 1.20840
High Target: 1.21480
Low Target: 1.20500