Technical Analysis – USDCAD recoils beneath 200-SMA but upside still active
- Anthony Charalambous
USDCAD’s seven-week uptrend from the 6-year lows remains structurally intact with shaped higher lows and highs, in spite of the fresh pullback from the peak of 1.2807. Upside sentiment appears to be growing, something also being indicated by the softened negative slopes of the 100- and 50-day simple moving averages (SMAs). Furthermore, the rising 50-day SMA is steering for a possible bullish crossover of the flattening 100-day SMA, which ultimately could confirm upside improvements should positive price action intensify.
The short-term oscillators are currently mixed however have yet to signal negative forces as the frontrunners. In bullish regions the MACD has slid a tad beneath its red trigger line, while the RSI is trying to sustain its pivot northward prior to reaching the 50 threshold. The negative charge of the stochastic oscillator has yet to show signs of slowing, signalling strong buying interest is still absent.
Trying to preserve the structure of the recent uptrend, buyers may face initial resistance from the capping 200-day SMA at 1.2600. If buyers gather adequate forces and beat the curbing 200-day SMA, they may then propel to test the upper Bollinger band at 1.2718 before revisiting the five-and-a-half-month high, which marginally overstepped the 1.2800 handle. Conquering the 1.2807 peak could reinforce upside tendencies bringing the resistance border of 1.2880-1.2955 quickly into play.
Otherwise, if sellers fuel another pullback, downside friction could commence from the immediate 1.2524 low and the rising mid-Bollinger band, approaching from below at 1.2493. Retracing further, the pair may then meet a support zone from the 1.2425 low until the 100-day SMA at 1.2359. Should this break down, the reinforced base of 1.2251-1.2308 could challenge the descent.Summarizing, in order to safeguard the positive structure in USDCAD, the price would need to beat the 200-day SMA. Moreover, a push beyond 1.2807 could bolster buyers’ confidence, while a dip below the 1.2200 mark may reinstate power in the bigger bearish bias.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.