Canadian Greenback Technical Forecast: USD/CAD Bounce or Break?

The Canadian greenback ended the week on a powerful observe, boosted by a USD sell-off and better oil costs however trades close to a ‘make or break’ resolution level

Loonie (CAD) Weekly Technical Forecast: Bullish, Upon Trendline Bounce

Since bottoming out in June of 2021, USD/CAD has made a somewhat uneven try at forging a longer-term uptrend. For probably the most half, the pair has printed greater highs and better lows however the latest US greenback sell-off brings USD/CAD perilously near the decrease sure of the ascending channel and marks two consecutive weeks of sizable declines.

USD/CAD Weekly Chart

USD CAD Weekly Chart

Supply: IG, ready by Richard Snow

The every day chart helps view latest value motion in a extra granular kind. Firstly, the pattern following, momentum indicator, the MACD, exhibits the MACD line persevering with under the sign line with each strains showing under the ‘0’ line – suggesting bearish pattern continuation. The Relative Energy Indicator (RSI) approaches however has not but dipped into overbought territory suggesting that there could also be some additional promoting forward. A break under the trendline leaves loads of room for USD/CAD to drop, as the following vital zone of help lies between 1.2275 and 1.2310 earlier than 1.2220.

Whereas costs might proceed decrease we’re beginning to see what seems to be like a slow-down within the USD sell-off which will be seen on the USD/CAD chart under as yesterday’s closing candle printed a reasonable decrease wick – signaling a rejection of decrease costs. On the time of writing, Friday’s every day candle additionally reveals a reasonable decrease wick whereas buying and selling near flat on the day. Contemplating this alongside the proximity to trendline help, goes someway to supporting a possible reversal play as soon as confirmed. Areas to observe for better conviction within the reversal narrative are available at 1.206 and the 23.6% Fibonacci degree (drawn from the March 2020 excessive to the 2021 low) at 1.2635.

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Brush up on the best way to learn candlestick charts by way of our full information.

USD/CAD Each day Chart

USDCAD Daily Chart

Supply: IG, ready by Richard Snow

Main Danger Occasions for the Week Forward

The financial calendar seems to be somewhat mild for the US and Canada over the upcoming week. The foremost knowledge factors are headline and core CPI (inflation) knowledge within the lead as much as the Financial institution of Canada’s first assembly of the 12 months on January the twenty second the place it’s largely anticipated that we are going to see a price hike from 0.25% to 0.5%.

DailyFX Financial Calendar

DailyFX Economic Calendar

Customise and filter dwell financial knowledge by way of our DaliyFX financial calendar

Charges markets at present value in round 78% likelihood of a hike.

Implied Likelihood of a Charge Hike on Jan twenty sixth

Implied Probability of a Rate Hike 2022

Supply: Refinitiv, by way of CADOIS

— Written by Richard Snow for Contact and comply with Richard on Twitter: @RichardSnowFX

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