USD/CAD Close to Resistance

USD/CAD Close to Resistance

By: Bastian Rubben

Another day full of nerves passed by in Wall Street, the buyers are still not willing to give up and therefore we see bullish momentums during the trading session. The SP 500 is facing the support of 1350-1360 points and a strong short-squeeze here might lift it to 1400 points. However, the stock markets are in front of important junction that will determine the trend in the shot-term and it is still soon to know whether it is time for selling or buying.

USD/CAD

The investors are starting to get used to the fact that every negative day in Wall Street means a strong day for the USD against most of the major currencies. Because of this strong correlation, it is important to know how to analyze the US indices, even if you do not trade them on daily basis, and it is important to acquire the ability to analyze the stock markets in order to trade currencies with the right timing.

The Canadian dollar has been moving through a channel against the USD for three months and we analyze it each time one of the currencies is getting close to the channel's boundaries. The CAD failed in breaking the support of the channel last week and the USD rose sharply since then, as it is approaching the resistance at 1.005. If the current pattern remains, the pair will make the bearish reversal and slide down to 0.9850 again. However, if the USD continues strengthening and break-through the resistance and the 200 SMA, it might jump to 1.02.

EUR/CAD

The Euro made another bearish candlestick against the USD yesterday, but it looks like it is getting a strong support around 1.30 and if it crosses above the 2-days high it might jump to 1.315. The European currency is also weakening against the CAD, but the support of the buyer is expected here as well, after the pair EUR/CAD reached the weekly support at 1.29. In case of a strong correction, the Euro might rise above 1.31 versus the CAD, but if the CAD surprises and breaks the current support, the pair might fall to 1.25.

GBP/JPY

Both currencies are showing impressive strength against the USD these days, in spite the strength of the USD against the other major pairs. Therefore, this pair created a triangle pattern, which emphasizes the fact that the pair is stamping. The pound is getting the support of the lower edge and might rise to 130.0 from this point. In these kinds of pattern, the technical trader should get prepared for a break-down or a break-up of one of the triangle's edges. In this case, a break-down might pull the pair down to 127.0 and a break-up might lift it to 131.80.