CAD : Yearly Support

(Thu, 26 Nov 2020). The Canadian Dollar is up nearly 0.8% against the US Dollar since the start of the week with USD/CAD plummeting back into objective yearly open support. While the broader risk remains weighted to the downside, the immediate decline may be vulnerable here and we’re looking for price inflection off this zone These are the updated targets and invalidation levels that matter on the USD/CAD price charts.

CANADIAN DOLLAR PRICE CHART – USD/CAD DAILY

Technical Outlook: In last month’s Canadian Dollar Price Outlook we noted that a, “near-term breakdown in USD/CAD takes price into the lower bounds of a multi-month consolidation pattern heading into the US presidential elections.” The event charged a test of the objective 2020 yearly open at 1.2975 (low registered at 1.2928) before rebounding with price once again settling just above this threshold ahead of the holiday break.

A close below 1.2975 is needed to mark resumption of the broader downtrend with such a scenario exposing subsequent support objectives at the 1.2887 and the lower parallels / 1.02782. Daily resistance stands at the 75% parallel (currently ~1.3080s) with a broader bearish invalidation at pitchfork resistance around 1.3160s.

CANADIAN DOLLAR PRICE CHART – USD/CAD 120MIN

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an embedded descending pitchforkextending off the September / October highs with price now probing confluence support here at the September low / yearly open at 1.2975/94- looking for inflection off this zone. Weekly open resistance stands at 1.3081 backed by the 50% retracement of the October decline / upper parallel at 1.3159 – a breach there is needed to suggest a larger reversal is underway towards 1.3213 and the November open at 1.3314.

Bottom line: USD/CAD is trading into the key support at the objective yearly open – looking for a reaction down here. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops. Be on the lookout for possible topside exhaustion ahead of 1.3159 on recoveries IF price is indeed heading lower. Ultimately a breach / close above this formation would be needed to shift the focus higher again in the greenback.

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