Technical Analysis – USDCAD hits new 4-year high on dovish BOC
January 23, 2014 9:50 am
The Canadian dollar weakened drastically on Wednesday after a dovish Bank of Canada outlook on the economy, following the central bank’s monetary policy meeting.
USDCAD rallied to a new 4-year high of 1.1172 by the European session on Thursday after breaking a key psychological barrier of 1.10 late on Wednesday.
The pair is approaching the 50% Fibonacci retracement level (1.1220) of the decline from the March 2009 high (1.3063) to the July 2011 low (0.9404). This Fibonacci level will act as immediate resistance, while a penetration above this level will favour an upside move to next resistance at 1.1654, which is the 61.8% Fibonacci level. The July 2009 high rests in this area (at 1.1723).
Bullish sentiment on the pair is strong, as market action remains above the 20 and 50 – day moving averages. The stochastic is in bullish territory and above 80. This is close to extremes (overbought), therefore a correction is possible. Major support is found at 1.0792, which is the 38.2% Fibonacci level. The 23.6% Fibonacci level is below at 1.0258.
The Canadian dollar weakened drastically on Wednesday after a dovish Bank of Canada outlook on the economy, following the central bank’s monetary policy meeting.
USDCAD rallied to a new 4-year high of 1.1172 by the European session on Thursday after breaking a key psychological barrier of 1.10 late on Wednesday.
The pair is approaching the 50% Fibonacci retracement level (1.1220) of the decline from the March 2009 high (1.3063) to the July 2011 low (0.9404). This Fibonacci level will act as immediate resistance, while a penetration above this level will favour an upside move to next resistance at 1.1654, which is the 61.8% Fibonacci level. The July 2009 high rests in this area (at 1.1723).
Bullish sentiment on the pair is strong, as market action remains above the 20 and 50 – day moving averages. The stochastic is in bullish territory and above 80. This is close to extremes (overbought), therefore a correction is possible. Major support is found at 1.0792, which is the 38.2% Fibonacci level. The 23.6% Fibonacci level is below at 1.0258.
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