Breakout into Fresh Highs:
The USD/CAD had a down and up year, being up in the second half of the year, since the July low at 1.0620. Recently, price stalled at the previous 2014-high at 1.1278. After a week or so of consolidation, USD/CAD continued its bullish trend, breaking above the 1.1278 level into fresh highs on the year.
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The 1.1278 level might now becomes support. But on a pullback, the market can still look bullish with price holding above 1.12. Below that, we can anticipate a bearish correction toward 1.11, though the overall trend since July would still be intact as long as price holds above 1.0950 and the rising trendline since July. The bullish momentum is also displayed as the daily RSI has tagged above 70 and held above 40.
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It should be noted that the USD/CAD’s bullish trend extends all the way back to 2011, when USD/CAD rebounded from a low of 0.9406. The monthly chart below shows that the rebound in July bounced off the 100-month SMA as well as a rising trendline from 2012. Also note that the bounce off of 1.0657 is off of a previous resistance for a 3-year long price bottom. With a long-term price bottom put in, and price giving us a long-term bullish slingshot signal, we can be looking at a long-term bullish outlook.
In the short to medium-term, we have a couple of pivots to monitor for resistance.
1) 1.1473 – a previous support pivot. We should watch this level up to the 1.15 psychological level as resistance.
2) 1.1724 – with the prevailing uptrend revived since July, there could be upside to 1.1724, a support/resistance pivot made in 2008-2009.
With fresh highs on the year, the USD/CAD looks poised to test these levels in the coming months, and will likely be considered a good candidate to buy on short-term dips.
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