USD/CAD Price Forecast: Establishes new uptrend after sudden reversal
- USD/CAD is unfolding a bullish move higher within a longer-term range.
- The short-term trend is now bullish, favoring more upside eventually.
USD/CAD was declining within its longer-term range until it bottomed out on September 25 and began rising.
What started out looking like a correction of the downmove has since morphed into a full blown bullish reversal and the start of a new leg higher within the range.
USD/CAD Daily Chart
The short-term trend is now bullish and given the old saying that “the trend is your friend” the odds favor a continuation higher.
The next target to the upside lies at resistance from multiple market tops at around 1.3789. A break above that could see prices push further up to 1.3850. It would be wise to wait for a pullback before any aggressive buying. The support zone between 1.3650 and 1.3670 might be a good place to enter longs.
The Relative Strength Index (RSI) is at 68.34 which is almost in the overbought zone above 70. If it moves into overbought it will be a signal not to add to long positions.
USD/CAD had been unfolding what looked like an ABC pattern or Measured Move during August and most of September (see chart). The pattern generated downside targets near the base of the range.
However, price action since has proven this interpretation wrong, invalidating the bearish forecast.
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
