Musk threatens Apple with legal action over App Store bias towards OpenAI
USDCAD Dip to Mid-1.14s Favored
Last week, we highlighted the tight consolidation on USD/CAD, discussing the potential for a bullish breakout above key resistance at 1.1670 in depth (see USD/CAD Bull Flagging Below 1.1670 – Big Breakout Still Possible This Year). As it turns out, the pair just couldn’t muster enough strength to break above the critical barrier, and as we got to press today, the unit is pressing against the bottom of its symmetrical triangle pattern.
If rates manage to break below this floor, the first swing in 2015 may well be to the downside. As the chart below shows, rates are now in the middle of the established bullish channel, and a move down to support at the bottom of the channel (also the 50-day MA) would entail over 100 pips of downside from current prices. Interestingly, the 38.2% Fibonacci retracement comes in near the bottom of that channel at 1.1485 and could prove to be a critical support level in January.
Meanwhile, the secondary indicators are providing mixed signals. The MACD remains well above the “0” level, but crossed below its signal line earlier this week, showing fading bullish momentum. From a longer-term perspective though, the RSI remains clearly within its recent bullish range (>45), suggesting no immediate risk to the established bullish trend.
Despite the potential for a short-term pullback, the medium-term bias in USD/CAD remains bullish, so readers may want to look to look at a dip below 1.1500 as on opportunity to join in the clear bullish trend at value.
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Source: FOREX.com
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