Thursday, 04 May 2017 16:14 Written by

Technical Analysis –USDCAD bullish in the short- and medium-term; price close to 14-month high

Posted on May 4, 2017 at 7:16 am GMT by the XM Investment Research Desk


USDCAD is marginally up from the day’s open. Should the price finish the day higher, it would constitute an impressive ninth day in a row of up movements for the pair.

Last week’s alignment resulting from the Tenkan-sen line (red) crossing above the Kijun-sen (blue) is indicative of the bullish bias that is in place. The RSI indicator reinforces this signal as it is currently well into bullish territory at 78. Do note though that the Kijun-sen is flat at the moment and RSI exceeds the 70 overbought level. These could be signs that the rally has run its course and that a near-term reversal is not to be ruled out.

Resistance to the upside could come from the fourteen-month high of 1.3757 from two days ago, while the 1.38 handle further above might act as an additional barrier.

On the downside, the 1.37 mark could act as psychological support. Below it, the 1.36 handle combined with the current level of the Tenkan-sen at 1.3583 might form another support area.

Looking at the wider picture, the pair has experienced significant consolidation from late 2016 till early April but has also been steadily rising over the last twelve months. Additionally, the price has been generally above both the 50- and 200-day moving averages (MAs) since late March of this year. Moreover, the 50-day MA is currently upward sloping while the 200-day is turning positively sloped as well. Overall, these point to a tilt to a bullish medium-term outlook.

Overall, the short-term bias is bullish and the medium-term looks like it is shifting towards being bullish.

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