I'm overall bullish
on the USDCAD
(and have been since the end of 2012), but I see downside risk on this pair during the second quarter. 1.28 is a major resistance level
that has held since January, and without a monthly break above this level in April
, we might just see a correction lower in the coming months. I've noted a negative divergence in the weekly RSI
(not pictured), suggesting that a break below 1.24 could signal the beginning of a move down towards 1.20 this spring. Even with such a correction, I would be looking for long opportunities around 1.18-1.20 for this summer. In the meantime, be mindful that the US dollar
is at risk of further losses given the weak NFP data (on top of weak manufacturing sector data) in March. If 1.23-1.24 continues to hold by the end of the month, this may lessen the downside risk as the weekly divergence would theoretically be less strong. I would similarly be looking for long opportunities upon a confirmed monthly break above 1.28 (and continuation above 1.30). Such a signal would open the path for another bullish
extension all the way up to 1.40-42 later this year.