USDCAD Weekly Analysis

The Canadian currency is thought off as a commodity currency. By being so, it should have a leveraged behavior against the USD.

Let's look at the weekly chart to see what this pair is doing these days:

As a general rule, when you have a 1-2-3 trend lines configuration (in blue) you can be quite sure that you are at the end, or near the end of a trend. This case was no exception. When trend line 3 was crossed over, we knew that the exhaustion move down was finishing.
The move up that started was a bit surprising. In view of the fact that nobody wanted to buy the pair before, the buying frenzy caught us by surprise. Only when the pair reached the ever performing 38.2% Fibonacci level, it did take some kind of respite.
Since then, the pair is moving up and down, reaching sometimes the 50% retracement as an upper limit and the 23.6% retracement as the lower limit of a big trading range. This consolidation type of action is confined inside an ascending channel, which is defining the general trend – Up.
By the general conventions of Technical Analysis, the expectations are that the price will emerge from a consolidation pattern the same way it entered the pattern. In this case, up.
The indicators, MACD histogram and RSI, are well beneath the overbought levels that should put us in a caution mode.

Conclusion:

The USDCAD pair is in a big trading range that should resolve to the upside. The depth of the range should be the target of the immediate breakout. When RSI should reach 70 and more, we could get the first sign for an overbought situation, but by then, we expect the pair to reach, at least the 61.8% retracement level (near 1.08).

Disclaimer

By no means do any part of this article recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this article. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this article was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.
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About the Author

Moshe Shalom
Head of Technical Analysis Department
ForexManage Ltd
Site: www.forexmanage.com
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