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The U.S. holiday will limit market interest today, with support at 1.1531 and resistance at 1.1638 likely defining the range.

Short-Term Outlook: Support and Resistance at 1.1531 and 1.1638 to Define Range

Support at 1.1531 is expected to limit the downside today as the hourly studies move to oversold levels. That being said, resistance at 1.1638 is likely to attract selling interest based on the triple top that is in place there

Medium-Term Outlook: Valuations Continue to Flag Caution

USD/CAD is struggling to forge to the topside despite taking out a key resistance trendline at 1.1600 on Tuesday, suggesting that a false break could be at hand. The overbought nature of the daily technical studies leaves us very cautious with respect to advances in USD/CAD. The probability of a valuation-driven pullback continues to rise, with resistance at 1.1622 expected to attract selling interest in this regard. Support is located at 1.1357 within the context of a retracement scenario


Short-Term Technical View: Triple Top at 1.1638 Hindering Advances


Must Pierce Support at 1.1531 in Order to Generate Downside Momentum

Rallies above the 1.1600 area have not been sustainable in USD/CAD as overbought technical conditions on the daily chart affect price action. Note that a triple top has formed at 1.1638 on the hourly chart in this regard as participants lighten up on long USD positions against this level. Expect the 1.1638-1.1656 resistance zone to cap the topside for a test of support at 1.1531. Nonetheless, the 1.1531 support level is not expected to be taken out today based on the fact that the hourly studies have moved to oversold levels. Hence, a 1.1531-1.1638 trading range appears to be the most that we can hope for today. Prices will have to eventually break below 1.1531 in order to increase the downside price momentum and highlight secondary support at 1.1446.

CAD Crosses – Short-Term Outlook:

EUR/CAD: Sticking to Bearish View, With Initial Resistance at 1.6326
Moves to resistance at 1.6326 and 1.6467 are expected to attract selling interest for a re-test of a double bottom at 1.6179. An hourly close below this level would reaffirm bearish stance, targeting 1.6113 thereafter. Place stops above 1.6495 on an hourly closing basis.

GBP/CAD: Moves to 1.9194 Expected to Attract Selling Interest

Resistance at 1.9016 and 1.9194 is expected to attract short-term selling interest in GBP/CAD for a test of initial support at 1.8791. An hourly close below this level would then target 1.8671. Place stops above 1.9245 on an hourly closing basis.

CAD/JPY: Congestive Support Located at 82.11

CAD/JPY must remain above congestive support at 82.11 in order to sustain bullish short-term outlook. An advance to resistance at 83.83 and 84.37 is preferred, with a close above 84.37 generating new upward price momentum toward 85.66. Maintain stops below 81.74 as a close below 82.11 would risk a deeper selloff toward 80.89.

Medium-Term Technical View: False Break Above 1.1600?



Overbought Valuations Continue to Warrant Caution

Tuesday’s bullish trend reversal above 1.1600 may amount to a classic “false break” after Wednesday’s bearish key reversal day. Although USD/CAD managed to produce a bullish trend reversal above a key resistance trendline at 1.1600 on Tuesday’s close, Wednesday’s sharp reversal lower and formation of a bearish key reversal day may cause this to be a classic false break. Traders remain cautious of rallies in USD/CAD due to the extremely overbought nature of the daily studies, with resistance at 1.1622 expected to attract initial selling pressure. Based on the overall uptrend that is in place, view valuation-driven pullbacks to 1.1357 and 1.1222 as better entry levels to rebuild long USD/CAD positions, with the uptrend remaining valid while prices trade above 1.0928.