USDCAD backs off after rising to swing area. Traders may be feeling overbought conditions

The USDCAD has been racing to the upside over the last few weeks with the low price at 1.3472 back on October 2. The high price yesterday reached 1.38475 on October 21. That’s a big move in a relatively short amount of time. The price also reached to a new high going back to August 6. My guess is that oscillators are probably pointing toward over-bought conditions (and probably diverging in RSI).

Today, the price has backed off a bit from a swing area between 1.3833 and 1.38475. There’s support down at 1.3788 to 1.3792.

Profit takers can lean against the swing area above and reestablish on a break above the area. .

Traders who might look to short for a corrective probe lower can also lean against the swing area above, but if broken be careful. The trend is still intact (it is just overbought).

As far as the downside, if the price can get below 1.3788 we could return to the broken 61.8% at 1.3744 area and see what might happen there. Understand, however, there would probably need to be some USD bearish catalyst.

So sellers are sticking a toe in the water but only because there is a level to lean against at 1.3833 to 1.3847 (and overbought?). Absent that, and the buyers are still more in control.

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