USD/CAD could be done with its downtrend, as the pair is forming a double bottom pattern.
Can the pair bust through its neckline resistance soon and go on a reversal?
Here’s what we’re seeing on the 4-hour chart.
USD/CAD 4-hour Forex Chart by TradingView
After making a couple of failed attempts at breaking below the 1.3550 minor psychological mark, USD/CAD is now back to testing the double bottom neckline at R1 (1.3770).
By the looks of it, the Greenback is still reigning supreme while it rakes in safe-haven flows from increased global trade uncertainty while brushing off dovish Fed expectations.
Will we see sustained upside momentum trigger a break above the resistance?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Canadian dollar and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The 100 SMA is below the 200 SMA for now, but the tightly narrowing gap between the technical indicators suggest that a bullish crossover may be in order.
If so, look out for a bounce off the pivot point level (1.3720) that could propel USD/CAD past the neckline resistance and onto a rally towards the next upside targets at R2 (1.3830) then R3 (1.3880).
On the other hand, sellers defending the 1.3800 major psychological barrier could force the pair to retreat back to nearby support zones at S1 (1.3670) around the moving averages then S2 (1.3620).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
