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USDCAD Where Does the Market Want to Go?

FX:USDCAD   U.S. Dollar/Canadian Dollar
Since the start of the new year USDCAD             has sold off of the highs to spark a pretty intense downward move, especially on lower time frames. Many of you have probably followed this price action down as it has been dropping, and hopefully picking up some handsome profits. However we must not forget the long-term bullishness of this pair. For three years, since the spark of 2013 to the beginning of 2016 USDCAD             has been extremely bullish consistently making new highs. Whilst a lot of the price action in this pair is related to fundamentals, especially with oil             due the correlation between Canada's economy and oil             , we cannot throw technicals out the window.

From a technical standpoint... the 1.34500 level was the first major level that most of the street had hoped to be play out as resistance turned to support. While it did not hold as support and price action broke right through it to the downside, it continued its role as resistance. On lower time frames price action can be seen kissing off the 1.34500 level and reversing to the downside sharply making a fresh new low. However that new low stopped abruptly... and it got us thinking... why? Looking at this analysis now you can see that price action stopped so abruptly where it did because it had kissed off the yellow trend line. We are calling the yellow trend line the medium length trend line comparing it to the longer-term red trend line, but the yellow trend line is still extremely strong. For that reason we aren't comfortable taking any short positions on USDCAD             until this yellow trend line is broken. If broken, we can expect to see this pair make its way down to the next area of what should become resistance turned support, 1.28100. If price action makes its way down to that level... and it holds as support we may enter into a ranging market between 1.34500-1.28100.

Keep this analysis in mind when trading this pair guys... GOOD LUCK trading!

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