USDCAD – Key Support Holds Again, Big Test Coming

The dollar experienced weakness earlier in the session against its Canadian counterpart but once again, as the pair approached what has become an important support level around 1.30, the pair rebounded higher putting the spotlight on 1.32, should it get that far.

While 1.30 has been a key level of support for the last five months, only since the end of last year has the support level been tested – on three separate occasions – and followed by a series of lower highs being made. This would suggest that sellers are gaining in confidence which may begin to make the protectors of the 1.30 support a little nervous.

USD/CAD – Canadian Dollar Edges Higher as Markets Eye Yellen Testimony

With 1.30 having once again been well supported today and the pair now higher on the day, attention now shifts to just above 1.32, the most recent swing high from a week ago. A failure to break above this level – thereby creating yet another lower high – would be very bearish and suggest downward momentum has picked up another notch.

A break through here on the other hand may signal a switch in favour of the bulls and signal the line in the sand has been drawn at 1.30 and for now, at least, none shall pass. Above 1.32, 1.34 becomes a notable support level which lies around the swing high prior to last weeks move.

USDCAD Daily

For more charting analysis, check out our latest video below.

MS

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.