The USD/CAD is testing important one-month highs near the 1.21600 vicinity in early trading today. The USD/CAD remains within an abundantly clear bearish trend, but the Forex pair has been able to produce a move higher as nervous trading has begun to have an effect. The U.S Federal Reserve’s FOMC Policy Statement this coming Wednesday likely has financial institutions positioning themselves with risk-averse tendencies.
Technically, the USD/CAD is still traversing an important bearish price range. Traders need to be able to acknowledge that short-term perspectives can often differ with mid-term outlooks. Technically, if the USD/CAD is able to break above its current resistance and test the 21.66000 to 21.70000 junctures and prove it can sustain values above, this could spark additional bullish momentum near term.
Traders should be very careful and use their risk-taking tactics precisely. The USD/CAD is likely to produce choppy trading conditions the next couple of days, particularly if resistance levels prove to be vulnerable. If the 21.80000 mark begins to be tested, it is conceivable that speculative buyers may target another leg up that could challenge highs seen on the 12th and 13th of May when the USD/CAD traded near the 1.20000 level.
However, traders are reminded not to be overly greedy. Placing take-profit orders with a cautious approach may prove to be more worthwhile, instead of wishing upon the stars for the highs from the 12th and 13th of May to be attained. The short term within the USD/CAD is likely to be volatile as its long-term technical bearish trajectory clashes with the nervous sentiment being generated in financial institutions. Traders should monitor the Forex market and be ready to make quick trades.
The long-term trend of the USD/CAD has certainly been bearish and this is unlikely to change drastically. However, short-term trading conditions will be nervous and speculators cannot be faulted for looking for the potential of moves higher in the near term. Traders are urged not to be ‘married’ to their trading positions and have their stop-loss and take-profit orders working. It is quite possible that, if the USD/CAD test higher resistance levels, it could spark a sudden reversal lower too, which if not planned for, could produce a painful day of trading for speculators.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.21660
Current Support: 1.21410
High Target: 1.21870
Low Target: 1.21010