Technical Analysis

Double-top or consolidation in USD/CAD?

USD/CAD nears the lows of the week

The USD/CAD trade has been all about politics and global sentiment lately. NAFTA negotiations have jarred it, along with the spat with Saudi Arabia and the broad risk trade has been a driver this week.

Now Canadian fundamentals are in focus and they look pretty good. CPI hit its highest since 2011 and it’s making Bank of Canada hikes increasingly likely.

What’s the chart say?

The main feature on the one-month chart is the top at 1.3177. That area was tested two or three times this week and held up strongly, in a sign of a potential top. But to the downside, the pair is going to need to clear 1.3050 to get any momentum.

That leaves traders in a bit of a pickle. If you got a good fill close to 1.3100 on the way down, there’s some value in holding and hoping for a break lower and a drop down to 1.3000 and below but the risk/reward isn’t great in putting on something at these levels.

ForexLive

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