Obviously, there will be a lot happening next week from a fundamental perspective and we are expecting to see increased volatility in the financial markets across the board. But the focus of this short article will be on the technical aspects and specifically on the U.S. dollar (USD/CAD) currency pair. Now, after the Bank of Canada’s shenanigans earlier in the week, the loonie managed to eventually climb higher, reaching 1.3400. At the time of this writing, it looks set to close the week in the positive territory.
The long-term weekly chart of the USD/CAD points to significant gains as things stand. The key technical points to consider going forward:
- Bullish breakout above key 1.3295 resistance, now support, suggest path of least resistance to the upside
- Reclaiming the 55-week moving average is important – there was significant follow-through on previous occasions when the USD/CAD moved above this average
- This year’s earlier sell-off came to a halt between the long-term 38.2% and 50.0% retracement levels. This relatively shallow pullback is usually a very bullish sign
- Potential bullish objectives: 1.3655 (old support), 1.3840 (61.8% Fib) and 1.4065 (last weekly up candle prior to down move)
- Short-term bias bearish below 1.3295 on weekly closing basis. If so, 1.30 or lower could be the next stop