The USDCAD has had the “big squeeze” today as better data (Canada Building Permits) failed to support the CAD, and traders have been forced to buy the USDCAD instead (see EARLIER POST HERE) . The stronger US dollar is also a contributor of course.
USDCAD approaches the highs from August
The price has gotten close to the targets at the 1.0986-1.0996 recent highs. The high has come in at 1.09816. This area with multiple highs an the underside of the broken trend line a the 1.1003 level should be a challenge (on the first test at least).
If this level is to be broken, I will be looking for support below to hold to prove to me, the buyers are intent on taking the pair up (and through resistance). Looking at the 5 minute chart, the 38.2-50% of the last move higher comes in at the 1.0945-537 level (this started after the largest corrective move today). If the price can stay above this area (yellow area), the buyers show me, that they are solid. A move below and I don’t have that confidence. PS sellers against the levels outlined above are ok as long as the price can get below the aforementioned support.
Remember, as noted in the earlier post (https://www.forexlive.com/blog/2014/09/08/technical-analysis-usdcad-grinds-higher-despite-better-building-permits/) , the price for the pair has been largely non trending above and below the 200 day MA (at 1.0896 today – see earlier post). The break away from this MA is what you would expect when the traders make up their mind (they chose higher). So I give the buyers the benefit of the doubt because of it. Can that idea fail? Sure but the sellers will have to prove it to me via a move below the support levels defined. So is there more upside in the future? I would guess a move above the 1.1000 level might trigger more stops/buying. We will see but risk is defined.
On the 5 minute chart, the price of the USDCAD now has support at the 1.0945-537.