Canadian Dollar Technical Forecast: USD/CAD, CAD/JPY

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Canadian Dollar, CAD, USD/CAD, CAD/JPY Technical Forecast: Mixed (see beneath)

  • USD/CAD value motion has retreated again to a big space of assist 1.2622-1.2672.
  • CAD/JPY has prolonged its topside pattern and has to this point spent all the week above the 90.00 psychological stage. The pair could proceed to be a extra enticing venue for long-CAD eventualities given the extreme focus paid to the USD at the moment, together with the U.S. inflation knowledge set to be launched subsequent week.
  • The evaluation contained in article depends on value motion and chart formations. To study extra about value motion or chart patterns, try our DailyFX Education part.

It was a story of two traits for USD/CAD this week. Both the week and the yr started on a robust word, with the pair bouncing from a key zone of assist that had come into play final Friday. This is identical space of assist that held the lows earlier in December, and this space exhibits between two longer-term Fibonacci ranges that demarcates this key spot on the chart between 1.2622 and 1.2672. Inside of this zone is one other Fibonacci stage, the 23.6% retracement of the 2020-2021 sell-off.

And there’s some related historical past right here, as effectively, as this zone was serving to to set assist earlier final yr till sellers have been lastly capable of break-through, after which it turned resistance in March and April.

USD/CAD Daily Price Chart

Chart ready by James Stanley; USDCAD on Tradingview

USD/CAD Vulnerable to USD-Themes

Helping to drive the pair via this week’s value motion was USD stream. The U.S. forex stays in what’s changing into a longer-term vary, however after a bullish flare to begin the week costs started to turn-around within the aftermath of the Friday NFP report. That’s what helped USD/CAD to drag again in the direction of this very key space of assist.

At this level, that assist stays in-play and whereas it could give technique to breakdowns ought to CAD-strength proceed to indicate, the query stays as as to whether USD/CAD can be probably the most enticing venue for such a state of affairs. Or, maybe, might merchants focus that CAD-strength expectation towards one other forex, such because the Japanese Yen which we’ll have a look at somewhat decrease on this article.

In USD/CAD, that key zone of assist is near-term assist till it’s damaged, and this may maintain the door open for bullish USD and/or bearish CAD eventualities. Above present value motion, the psychological stage of 1.2750 looms massive as this was the spot that helped to carry the resistance via this week. Beyond that, a spot round 1.2850 stays key, as this was a previous spot of resistance that bulls haven’t been capable of maintain above for very lengthy simply but. And past that, the identical 1.2950 that got here in because the excessive for 2021 features as an ‘r3.’

Underneath present value motion – ought to this key zone of assist give means, the following large spot on the chart is across the 1.2500 psychological stage. Below that, 1.2390, after which 1.2255 operate as s2 and s3 ranges.

USD/CAD Technical Forecast: Neutral

USD/CAD Daily Price Chart (Levels Applied)

Canadian Dollar Technical Forecast: USD/CAD, CAD/JPY

Chart ready by James Stanley; USDCAD on Tradingview

CAD/JPY

Over the previous few months as USD/CAD has been exhibiting some component of mean-reversion on longer-term charts, I’ve been focusing bullish-CAD eventualities in the direction of CAD/JPY. The technical juxtaposition of the pair is likely one of the main causes and from the month-to-month chart beneath, we will see a topside breach of a serious trendline that occurred via the second-half of final yr, coupled with a assist inflection round prior resistance in December.

CAD/JPY Monthly Price Chart

Canadian Dollar Technical Forecast: USD/CAD, CAD/JPY

Chart ready by James Stanley; CADJPY on Tradingview

CAD/JPY Shorter-Term

After a nasty two-month spill noticed greater than 500 pips erased from the spot value of the pair, assist confirmed up round that trendline projection after which bulls made a pronounced re-entry again into the equation.

Along the best way, consumers punched value again above the psychological 90.00 deal with forward of year-end, and thus far this week costs have remained above this key spot on the chart with out a lot as a take a look at of the massive determine. I highlighted a assist take a look at right here on Monday that has since seen bulls leap again on the bid.

Near-term value motion stays in a precarious spot for bulls, posturing close to the highs and pretty far-off from close by assist. But, this does maintain the door open for bullish eventualities which might come again into play with both a pullback to assist working from 90.00-90.25 or, alternatively, a topside breakout past the 91.66 excessive.

CAD/JPY Technical Forecast: Bullish

CAD/JPY Four-Hour Price Chart

Canadian Dollar Technical Forecast: USD/CAD, CAD/JPY

Chart ready by James Stanley; CADJPY on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and observe James on Twitter: @JStanleyFX

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