USD/CAD has managed to retrace its recent losses, trading around 1.3670 during early European hours on Friday. The daily chart analysis indicates that the USD/CAD pair is moving sideways, confined within a horizontal channel pattern.
Technical Indicators
Relative Strength Index (RSI)
The 14-day Relative Strength Index (RSI) is positioned at the 50 level, indicating a neutral stance. Further movement above or below this level could signal a clear directional trend.
Moving Average Convergence Divergence (MACD)
The MACD indicator suggests a budding bullish bias for USD/CAD. The MACD line is above the centerline and diverging positively above the signal line, reinforcing potential upward momentum.
Key Levels to Watch
Upside Potential
1.3700: The psychological barrier at this level is the immediate resistance. Breaking above it could signal further gains.
1.3720: The next target is the upper boundary of the horizontal channel, which acts as a significant resistance.
1.3740: Beyond 1.3720, the pair could test pullback resistance at 1.3740.
1.3800: If 1.3740 is surpassed, the USD/CAD could aim for the key level of 1.3800.
1.3846: The high from April marks a crucial resistance point, representing a significant bullish target.
Downside Risk
1.3600: The psychological level at the lower threshold of the horizontal channel provides key support.
1.3590: Closely aligned with 1.3600, this throwback support is crucial for maintaining the current channel pattern.
Conclusion
The USD/CAD pair is exhibiting a sideways movement within a defined horizontal channel. The RSI at 50 suggests a neutral stance, while the MACD’s bullish divergence indicates potential upward momentum. Traders should watch the key resistance at 1.3700 for signs of a breakout, potentially leading to higher targets. On the downside, support at 1.3600 and 1.3590 remains critical to prevent further declines. The trend forecast remains neutral until a clear directional breakout occurs.
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