USD/CAD Technical Outlook: Continues to Build its Bullish Case

[MongiIG]

Jul 11, 2022 | DailyFX | Paul Robinson, Strategist

USD/CAD TECHNICAL OUTLOOK

• USD/CAD continues to behave bullishly as it builds a base
• Could soon get some separation from long-term range

USD/CAD TECHNICAL OUTLOOK: CONTINUES TO BUILD ITS BULLISH CASE

Last week, we took a look at USD/CAD price action as it continues to act as though it wants to finally get some separation from a range that it has been building for the better part of a year. Since May we have seen sponsorship at increasingly higher levels.

This strengthening of price action around the top of an extended range suggests it is about to break, and the move could be quite explosive. USD/CAD is known for lots of deep retracements and its inability to follow through, but when it does get momentum it can be strong and unrelenting.

A breakout into the 13100s could trigger such a move as the ascending wedge forming since early May gives way to a sustained breakout. ‘Looking to the left’ there isn’t anything meaningful until a swing level created in 2020 in the 13400s.

However, when you pull back to the weekly chart you will see that USD/CAD is amidst a larger range back 2016. The high from six years ago was hit during the early days of Covid. The highest point of the extended range is 14690, so there is lots of potential.

Given the higher vol regime we are in today and USD strength, it appears odds are in favor of testing those highs and breaking to even higher levels. This wouldn’t happen all at once of course, but could develop some time this year.

What would undermine this outlook would be if a breakdown occurs out of the wedge and below the 12950 area. It wouldn’t completely dent a bullish bias, but put a breakout on the back-burners at the least.

 

USD/CAD WEEKLY CHART

USD/CAD DAILY CHART

USD/CAD Chart by TradingView