USD/CAD Bulls In Control Above 1.2400
Matthew Weller | May 27, 2015 03:11PM ET
As my colleague Fawad Razaqzada noted earlier today, oil is testing some key support levels around 58.00 (for WTI) and 63.00 (for Brent) ahead of tomorrow’s always-critical EIA oil inventories report. The recent weakness in oil prices has spilled over (no pun intended) into the forex market, where the oil-dependent Canadian dollar, Norwegian krone and Russian ruble are all falling against the US dollar.
With an uneventful Bank of Canada meeting now behind us, USD/CAD in particular may trade on its technical developments. The pair has seen a major break back above the 1.2400, which provided significant support on at least seven separate days in Q1 before finally giving way in mid-April. The combination of yesterday’s break back above this key previous-support-turned-resistance level and the two-week bullish channel off support in the mid-1.19s signals that buyers have regained the upper hand.
Get The News You Want
Get The News You Want
This bullish outlook is confirmed by the 4-hr. MACD indicator, which is trending consistently higher above its signal line and the “0” level, and the RSI, which is holding in “overbought” territory. While in overbought reading in an oscillator can serve as a near-term headwind, it’s important to remember that, by definition, it takes a strongly trending market to create an overbought reading in the first place.
Get The News You Want
Get The News You Want
Therefore, a near-term dip back to 1.2400 is certainly in play heading into the end of this week, but as long as buyers step in to defend that level and the bottom of the channel near 1.2350, the bulls will remain in control. Beyond the psychologically significant 1.2500 barrier, the next resistance level to watch will be the convergence of early April high and 78.6% Fibonacci retracement at 1.2650; this level could easily come into play around some of next week’s major economic reports from both sides of the 49th parallel.
Get The News You Want
Get The News You Want
Source: FOREX.com
Get The News You Want
For more intraday analysis and market updates, follow us on twitter (@MWellerFX and @FOREXcom)
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.