USD/CAD Outlook – The Pair Is Near Some Resistances

July 14, 2014 in Chart Alert

During the previous USD/CAD outlook update, we had indicated that the price was hitting a mid-term trend-line support and that we could expect some upward gains, including the possibilities of a near-term bottoming. The support was witnessed within a couple of days of posting that outlook. Let’s have the new chart with the current price-action.

USD/CAD weekly chart with support trend-line

USD/CAD weekly chart - support at trend line.

The upward gains looks small on the weekly chart but a look on a shorter-time-frame charts will indicate that the gains were substantial:

USD/CAD 4 hourly chart - the upward jump

As mentioned in the previous post referred above, we still remain in favor of further gains by USD/CAD. However, the price-action is near some resistance levels and some caution may be required.

Immediate possible resistances

USD/CAD and expected resistances

As indicated in the above USD/CAD daily chart, the currency pair was in a sideways mode for 4 days during the later part of June. The resistance during this range bound moves was in the range of 1.0749 to 1.0760. Some resistance is expected in this range again. Eventually a break of this resistance is expected but immediately after that the 55-day EMA may come as another resistance. The current 55-day EMA is at 1.0777 and hence resistance may be faced in the range of 1.0775 to 1.0790. One previous two occasions the resistance was witnessed slightly above the 55-day EMA. In fact this resistance will also be supported by the resistance of the lower edge of the very thing daily Ichimoku cloud.

Possible resistance of daily Ichimoku cloud

USD/CAD daily ichimoku cloud resistance

While we are talking aboy Ichimoku cloud, let’s have a look on another time-frame. The following USD/CAD chart is with the weekly Ichimoku cloud. Interestingly the very next resistance of Tenkan-line is falling near 1.0800 and the next one i.e. the upper edge of the cloud is also almost at the same level i.e. in the range of 1.080 to 1.0820.

USD/CAD weekly Ichimoku cloud resistance

Outlook – What to expect if the above resistances fail?

USD/CAD retracement levels for expected gains.

In case USD/CAD manages a break over 1.0825 and sustains over that level then it will be expected to target 38.2% retracement of the fall from 1.1278 to 1.0620. This level is at 1.0871. The interesting points to be observed are that 38.2%, 50% and 61.8% retracements are very close to some of the strong resistances previously witnessed. This combination makes those levels as quite strong resistances. Considering this a lot of caution will be required if the upward momentum continues to complete the mentioned Fibonacci retracement levels.

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