USDCAD consolidation sets up for a break next week.What levels are key for traders and why

The USDCAD has been trending higher, though its momentum has started to slow.

One key factor has been resistance at this year’s high, set back in August at 1.39458. This week, high prices have approached but stopped just short of that level, creating a ceiling.

Of course, ceilings can be broken. If that happens, traders will likely eye the 2022 highs at 1.3977. A move above that mark would open the door to more upside, pushing the USDCAD to its highest level in over four years (since May 2020).

In trending markets, counter-trend traders have to prove they can take back control. Put simply, if sellers can’t regain control, they’re not winning. How do they regain control? By moving the price below key technical levels.

First, I’m watching the 100-hour moving average (MA) at 1.3911, which has been trending higher. We’ve seen the USDCAD dip below this MA several times in the past dozen trading days, including yesterday and today, but these breaks haven’t gained traction. Currently, the price is back above the 100-hour MA at 1.3923 (with the 100-hour MA itself at 1.3911).

Next up would be the rising 200-hour MA, currently at 1.3879. It’s worth noting that the USDCAD hasn’t traded below this level since October 2, nearly a month—quite a stretch.

So as we head into next week, sellers will only start to win if they can push and hold the price below both the 100-hour MA and then the 200-hour MA.

Without that, sellers are not winning. Buyers are winning

Technical Analysis of USDCAD

Trend and Momentum:

• USDCAD trending higher, but momentum slowing.

• Key resistance at 2024 high (1.39458) reached in August.

Resistance Levels:

• 2024 high: 1.39458

• 2022 high: 1.3977 (above 2024 high)

Support Levels:

• 100-hour Moving Average (MA): 1.3911

• 200-hour MA (rising): 1.3879

Key Levels to Watch:

• Break above 1.39458 resistance opens door for more upside momentum.

• Failure to break above 1.39458 keeps ceiling intact.

• Sellers need to move below 100-hour MA (1.3911) and 200-hour MA (1.3879) to regain control.

Current Market Status:

• Price currently above 100-hour MA (1.3923).

• Sellers have failed to sustain momentum below 100-hour MA.

Next Week’s Outlook:

• Sellers must break below both 100-hour MA and 200-hour MA to gain control.

• Failure to do so indicates buyers remain in control.

This article was written by Greg Michalowski at www.forexlive.com.