- USD/CAD is steadily channeling higher on US Dollar strength.
- Underneath price lie the three most important Moving Averages providing a safety net.
- Price is marginally biased to continue rising within the bullish channel.
USD/CAD is broadly channeling higher on the daily chart as the US Dollar (USD) steadily appreciates against the Canadian Dollar (CAD).
The range stretches from around the 1.3600s to the 1.3400s at the moment, although it is incrementally slanting higher.
US Dollar versus Canadian Dollar: Daily chart
USD/CAD is currently trading plum in the middle of the channel as it seesaws between tepid gains and losses.
Given the bullish slant to the channel there is a slight but not significant bias for more upside and the pair could rise to the top of the channel at roughly 1.3675.
Clustering just beneath price action around the 1.3500 level are the three most important Moving Averages – the 50, 100 and 200-day (Simple Moving Averages). These are key because they are not only followed by private investors but also institutional players.
Additionally, on the chart of USD/CAD it is notable how price action has respected the support cushion provided by these SMAs on several occasions during the formation of the channel.
A move down from the current level in the mid 1.3500s will find support at the first SMA, the 50-day, at 1.3512, and probably bounce. Even if it penetrates below it is likely to find support from the 200-day SMA at 1.3502.
If it gets through all three SMAs the bottom of the channel comes in with further support at roughly 1.3470.
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