USD/CAD : Major Breakdown
(Tue, 23 Feb 2021). The Canadian Dollar is attempting a third consecutive daily advance against the US Dollar with USD/CAD continuing to grind into a critical support zone. We’re looking for a reaction down here with a below needed to keep the immediate decline viable into the close of the month. These are the updated targets and invalidation levels that matter on the USD/CAD price charts.
CANADIAN DOLLAR PRICE CHART – USD/CAD DAILY
Technical Outlook: In my last Canadian Dollar Price Outlook we highlighted that the USD/CAD recovery had faltered into the March trendline with the yearly opening-range preserved just above a key support confluence. We noted that, “Ultimately, a close below 1.2579 would put the bears back into control.” Today’s low registered at 1.2580- pay attention here.
Daily resistance stands back the trendline / yearly open at 1.2713 – look for a reaction there IF reached with a breach / close above the February open at 1.2785 needed to suggest a larger reversal is underway. A break below this key support zone would risk accelerated losses for the greenback with such a scenario exposing 1.2450 and the 2018 low-day close at 1.2312.
CANADIAN DOLLAR PRICE CHART – USD/CAD 120MIN
Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a descending pitchfork formation extending off the January / February highs with the weekly opening-range taking shape just above longer-term support at 1.2579-1.2619. Initial resistance eyed at 1.2665 backed by the 38.2% Fibonacci retracement / 2021 yearly open at 1.2695-1.2713. A downside break from here would keep the focus on subsequent support objectives at the lower parallel / 1.2527 and beyond and 1.2450.
Bottom line: The Canadian Dollar is challenging a major breakout here with USD/CAD now testing a critical pivot zone. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops. Topside advances should be capped by the 1.27-handle IF price is indeed heading lower with a weekly close below 1.2579 needed to keep the short-bias viable in the days ahead. Keep in mind we are heading into the close of the month and as always, we’ll want to remain nimble as price test this key inflection zone.
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