USD/CAD has been consolidating since making a new high on the year at 1.1671 last week. After falling to 1.1560, the pair found support, maintaining the bullish bias and momentum.
This week, the USD/CAD came back above 1.16, then made a bullish attempt after US GDP data for Q3 was revised up to an annual rate of 5.0% from the previous estimate of 3.9%. This bested the Q2 print of 4.6% as well.
However, the push failed to break above the 1.1671 high and price came back to test the 1.16 handle. There was also better-than-expected Canadian GDP data for the month of October, which came in at 0.3%. This beat forecast around 0.1%, and just a hair under the 0.4% print for September.
Today as we got into the 12/24 US session, we are seeing strong support at 1.16. USD/CAD also respected a rising speedline, and the 50-period SMA for the most part. The price action during the 12/24 session is telling us that USD/CAD is ready for a bullish continuation breakout.
Now, let’s say we have a failure and price falls back below 1.1560. Then, we should look out for a bearish correction. In this scenario, we should monitor the 1.1450-1.1475 support/resistance pivot area for support. This area is also reinforced by a rising trendlien from November. An aggressive bearish correction might extend to 1.1425, but if price can hold above 1.14, the market is still bullish. Below 1.14, USD/CAD would likely have shifted to a sideways market.
When we look at the monthly chart, we can see a support/resistance pivot area between 1.1720 and 1.1875. So, if price breaks above the current high at 1.1671, we have a little bit room to run until price meets this resistance area. With the monthly RSI likely above 70 at that point, we should start looking for resistance and price topping action in anticipation of a period of consolidation or bearish correction.
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