The USDCAD looks set to resume the uptrending move of the last 4 months as the Canadian Dollar is taking a hit from the fresh round of the crude oil price slump. The WTI crude oil benchmark traded today at $13 per barrel, marking 19-year lows.
The commodity-dependent Canadian Dollar has the 2nd highest crude oil reserves in the world, and is directly affected by crude oil price. The steady drop in crude oil price has steadily weakened the CAD against the US Dollar, which continues to see strength as a result of safe-haven interest from traders due to today’s risk-off sentiment.
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Technical Outlook for USDCAD
Last week, I identified a falling wedge pattern on the daily chart of the USDCAD, and today’s renewed upside on the USDCAD seems to be the catalyst needed to spur a continuation of the breakout move on the pair. Price broke the wedge last week but suffered a pullback which has now been rejected by the wedge’s upper border.
Continuation of the bullish move that has characterized today’s candle sets the tone for the pair to attain the 1.42746 resistance (16 March and 6 April highs). However, there is a likelihood for prices to encounter a pitstop at 1.41514 along the way. Above these resistance areas, 1.43431 and 1.45177 constitute further price targets to the upside, with the latter representing the price projection point from the wedge’s breakout point.
On the flip side, 1.40023 could be a pullback target if there is price rejection at the 1.42514 price level. Price rejection at any of the upside targets allows the price target below it to become available for a retest.
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