USD/CAD Approaches the 2014-high After Strong NFP Report

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USD/CAD Approaches 2014-high After Strong NFP Report

Today, the Non-Farm Payroll report is pushing up the US Dollar. The Bureau of Labor Statistics reported 248K non-farm jobs added to the economy in September. This beat forecasts around 216K. The August print was also revised up to 180K from the initial reading of 142K. Meanwhile, the unemployment rate fell to 5.9% from 6.1%.

USD/CAD 4H Chart 10/3
usdcad 4h chart 10/3

(click to enlarge)

Prior to the NFP, the USD/CAD was consolidating this week under the 1.1223 high. After a brief break below the 50-period SMA in the 4H chart, the pair came back up in a v-shape reversal. After the NFP, this bullish recovery accelerated and pushed above the 1.1223 high.

USD/CAD Daily Chart 10/3
usdcad daily chart 10/3

(click to enlarge)

The next resistance will the 2014-high at 1.1278. The daily chart shows a market that was essentially sideways in 2014. However, the prevailing trend in 2013 was bullish, the the trend since July has been bullish. So, while we can anticipate some short-term consolidation around 1.1278-1.13 especially with the daily RSI coming up to overbought conditions, we should not be surprised if the bullish trend continues once the RSI falls back below 70.

If the market does continue the uptrend, where will it go to? If we look at the long-term charts, ie. the monthly chart, we can see that price is indeed developing a bullish outlook after breaking above the 100-, 50-month SMAs as well as a falling trendline from 2003. It has since bounced off these broken resistance factors, treating them as support, which suggests bulls are taking over in the long-term. The RSI has also broke above 60. Since 2008, the RSI has tagged 70 and has for the most part held above 40, so we can say that there is long-term bullish momentum behind the current rally.

USD/CAD Monthly Chart
usdcad monthly chart 10/3

(click to enlarge)

The 1.1714 area is a support/resistance pivot seen in 2004 through 2009. We also see the 38.2% fibonacci retracement level of the 2002-2007 decline (from 1.6178 to 0.9056), at 1.1780. So, if price breaks above 1.13, it as room toward at least 1.17 before approaching key resistance factors.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.