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Jason Sen

USD/CAD holds key longer-term support levels

USD/CAD has been trading mostly sideways over the past four months but, more importantly, has been holding perfectly above the 100-week moving average, marked by the blue line in the weekly chart below.

We therefore have very important support around 1.2760/1.2750 as we become oversold on the daily chart. We must also watch for further support just below from the 15-month trendline at 1.2665/1.2655. This area matches the three-month lows seen in June and longer-term bulls can use this as a buying opportunity again.

Longer-term trades generally require wider stops and in this case it might be wise to place them below 1.2580. If stops are activated this signals a resumption of the correction. Bear in mind that a break below this year’s low at 1.2458 would be further confirmation of negative sentiment and we could head towards 1.2160.

The USD/CAD daily chart below shows the sideways trend since the middle of May this year. We have bounced from the very short-term two-month trendline support this week, but will need to beat 1.3000 if we are to head up towards the middle of the four-month range to target intersecting trendlines at 1.3120/30. This should be an important challenge and it’s only a break above the late-August high at 1.3145 that would signal further gains, heading towards strong resistance from the 200-day moving average and the four-month trendline resistance at 1.3270/1.3295.

USD/ZAR sold off to strong support from the longer-term Fibonacci area at 13.55/13.50 down to the 100-week moving average and three-and-a-half-year trendline support area at 13.30/13.20 in August. The weekly chart below shows a very strong bounce from mid-August to the beginning of September, but we are starting to drift lower again, having failed to test the upper trendline.

usdzar 9_9

We could now head back towards the 13.55/13.30 support area to offer another buying opportunity. Just be aware that a break below the October 2015 low at 13.00 would then be seen as a sell signal having confirmed a breakdown of the support. We could then quite quickly target the March and June highs for 2015 at 12.64/12.53.

Bulls now require a break above the eight-month upper descending trendline at around the 15.00/15.05 area. Further confirmation will come with a push up through 15.18, which would allow the pair to target 15.56/15.68 and the early summer highs of 15.87/15.97.

Jason Sen
Technical Analyst & Trader

For more information, trading education and offers visit InterTrader

The content of this article is the personal opinion of the author and not InterTrader. The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest. Nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.

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