The USDCAD forex pair has seen a lot of action lately, rallying strongly, only to be hammered back down over the last several trading sessions. As of noon EST, the USD/CAD is down about 0.32% on the day.
On March 19 the USDCAD broke aggressively higher out of a triangle chart pattern. The buying stopped there though, right in the vicinity of the former 52-week high at 1.1225 (levels not seen since 2009). The new high of 1.1279 (March 20) has created resistance area between 1.1225 and 1.1279.
From that resistance area the price has retreated all the way back to the support zone of the triangle near 1.1050 (as of March 27). Given the strong selling though, downward pressure is likely to continue in the short-term.
The longer-term trend is still up, so this sell-off could indicate we are just entering a consolidation or a range, where the price channels between 1.1279 and about 1.0900 before breaking higher or lower. A drop below 1.0900 signals a longer-term down move is underway, at which point, rallies become selling opportunities.
Short-term outlook is for more downside. Given the long-term uptrend though there are likely to be buying opportunities upcoming as long as the price stays above 1.09. Such buying opportunities will be discussed in future outlooks as they arise.
Cory Mitchell, CMT