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Technical Analysis – USD/CAD rally takes a break

USD/CAD 25jan19 | EconAlerts

USD/CAD rally takes a break; looks neutral in the short-term.

USD/CAD stabilised within the 1.33 handle after Monday’s rally, with momentum indicators supporting that consolidation may continue in the short-term; the RSI has reversed down to meet the 50 neutral level, the MACD has improved above its red signal line and towards zero, while the Ichimoku Indicators, (the red Tenkan-sen and the blue Kijun-sen lines) have moved sideways. The 20- and the 50-day simple moving averages (MA), though, which are set for a bearish cross, suggesting that the downfall off 1.3663 may be more than temporary.

On the downside, the bears could meet immediate support around the 50% Fibonacci of 1.3221 of the up-leg from 1.2781 to 1.3663, which they failed to overcome last week. If this prove a weak obstacle this time, the restrictive area around the previous low of 1.3179 should be another area to watch before the 200-day MA currently at 1.3100 comes into view. Any decisive close below that line could activate a stronger selling pressure.

Should the pair crawl above the 38.2% Fibonacci of 1.3325, the pair will likely retry to break resistance between 1.3370-1.3385. Slightly higher the 23.6% Fibonacci of 1.3455 could also halt upside movements, though, the 1.3600 round level is expected to be a bigger challenge as any violation at this point could reassure that the uptrend off 1.2781 is not over yet.

Turning to the medium-term picture, the rebound from the 1.3179 level kept the market bullish in the three-month timeframe. A failure to hold above that mark would turn the outlook neutral while a rally above the 1.3663 level would turn the market even more positive.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.


Source: XM

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