USDCAD is edging higher today as it continues to hover around the rather busy 1.3485-1.3533 area. This is a key range that has proven its worth both as support and resistance since September 2022. Interestingly, the aggressive convergence of the simple moving averages (SMAs) employed is usually associated with an imminent strong move, but its direction is unknown at this stage.
And the momentum indicators are not really helpful. The Average Directional Movement Index (ADX) has sunk below its 25-threshold, confirming the current range-trading phase. Similarly, the stochastic oscillator is almost at its midpoint, hovering around the moving average. The next move by the stochastic would be an initial strong signal of the start of a new trend.
A bounce higher by the stochastic could assist the bulls into staging a new rally and limit the recent losses. In addition, there is a bullish double-bottom pattern (bottoms on April 14 and May 8) developing in USDCAD. However, the bulls have to wait for the 1.3667 neckline to be broken first.
Provided that they clear the much talked about 1.3485-1.3533 area, the bulls would then look for a retest of the 23.6% Fibonacci retracement at 1.3605. Even higher, the double bottom neckline at 1.3667 and the December 16, 2022 high at 1.3704 respectively could prove tougher to crack.
Should the stochastic break lower, the bears would aim to overcome the current 1.3485-1.3533 range populated by the 50-, 100- and 200-day SMAs and the October 4, 2022 low respectively. They would then set their eyes on the 38.2% Fibonacci retracement of the April 5, 2022 – October 13, 2022 uptrend at 1.3375, a tad ahead of the double bottom pattern lows at the 1.3300-1.3314 area.
To sum up, USDCAD is at a critical point. The bears are keen for another retest of the 1.3300 area, but the bulls are itching for the completion of the double bottom pattern.
USDCAD is edging higher today as it continues to hover around the rather busy 1.3485-1.3533 area. This is a key range that has proven its worth both as support and resistance since September 2022. Interestingly, the aggressive convergence of the simple moving averages (SMAs) employed is usually associated with an imminent strong move, but its direction is unknown at this stage.
And the momentum indicators are not really helpful. The Average Directional Movement Index (ADX) has sunk below its 25-threshold, confirming the current range-trading phase. Similarly, the stochastic oscillator is almost at its midpoint, hovering around the moving average. The next move by the stochastic would be an initial strong signal of the start of a new trend.
A bounce higher by the stochastic could assist the bulls into staging a new rally and limit the recent losses. In addition, there is a bullish double-bottom pattern (bottoms on April 14 and May 8) developing in USDCAD. However, the bulls have to wait for the 1.3667 neckline to be broken first.
Provided that they clear the much talked about 1.3485-1.3533 area, the bulls would then look for a retest of the 23.6% Fibonacci retracement at 1.3605. Even higher, the double bottom neckline at 1.3667 and the December 16, 2022 high at 1.3704 respectively could prove tougher to crack.
Should the stochastic break lower, the bears would aim to overcome the current 1.3485-1.3533 range populated by the 50-, 100- and 200-day SMAs and the October 4, 2022 low respectively. They would then set their eyes on the 38.2% Fibonacci retracement of the April 5, 2022 – October 13, 2022 uptrend at 1.3375, a tad ahead of the double bottom pattern lows at the 1.3300-1.3314 area.
To sum up, USDCAD is at a critical point. The bears are keen for another retest of the 1.3300 area, but the bulls are itching for the completion of the double bottom pattern.
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