USDCAD nearing key long term support
The USDCAD is nearing the lows from September 2017 at the 1.2061 level. This is important for 2 reasons:
- * It’s the long term 50% retracement of the 2011 lows to 2015 highs.
- * A break below the 1.2060 level would trigger a long term double top of the 2015 and 2020 highs which would “project” a move well below parity.
Personally, I think it’s hard to imagine we could get a sustained move long term back below parity. I have my doubts. On the other hand, I think we should be very respectful of the current price action. I do think the USDCAD looks vulnerable, especially for a possible “stop loss” run below the 1.2050 level and maybe even below 1.2000. However, I will have my radar on, looking for any “false breakdown” and a move back above the 1.2060. That would trigger a counter trend long for me in the weeks ahead.
Weekly RSI is very oversold, and with stocks elevated at current levels, a “blimp” in risk appetite (meaning if stocks move lower in the coming weeks) should spark a USD rally, especially against commodity currencies like the CAD that have had a relentless bid as of late. Also keep in mind, several hundred pips higher in the pair and the BOC was already concerned with the strength of the CAD. How do they feel now?