The USD/CAD has produced short term bullish sentiment which has begun to produce tests of resistance levels. However, this reversal upwards comes on the heels of important support levels being tested last week near 1.32400. Prior to the test of this support level last week, the last time the juncture of 1.324000 was consistently approached was late February, this happened before a true deterioration of value began to unfold in the forex market as the USD was sought globally as a safe haven.
Since late March the USD/CAD has produced an incrementally strong bearish trend which continued until about the 10th of June, when another burst of USD strength was seen in many major forex pairs. The Canadian Dollar did lose ground against the US Dollar in late June, when another selling wave produced another bearish trend that took the USD/CAD to its low watermarks last week of approximately 1.32400.
Trading in many forex pairs the past week have seen short term USD strength emerge. The question is if this is a new trend or simply a short term reaction that certainly happens in markets as impetus develops via international transactions that affect forex markets frequently. After hitting resistance near the 1.339000 level early today, the USD/CAD has produced a sell-off and its current price vicinity suggests support levels below could be targeted by short term traders who believe the bearish trend of the USD/CAD will reestablish itself.
However, it should be noted that the USD/CAD has seen a strong amount of selling and its low watermarks around the 5th of August produced a solid reversal upwards develop. Therefore speculators may prefer to wait and see support levels of 1.337000 be broken below and for selling action to sustain itself below this level before seeking downward momentum.
The price action in the USD/CAD has been swift. Before last week’s low watermark of 1.32400 was touched, the forex pair actually traded near the 1.34500 level. Traders may believe the bearish trend of the USD/CAD will remain intact mid-term, but its short term trading range leaves the door open to speculative trades on both sides for buying and selling. Stop losses need to be used when trading the USD/CAD to protect against fast trading conditions as a battle for short term value plays out.
Canadian Dollar Short Term Outlook:
Current Resistance: 1.34100
Current Support: 1.33700
High Target: 1.34500
Low Target: 1.33000
