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


Canadian Greenback, USD/CAD, CAD/JPY Speaking Factors:

  • USD/CAD is bouncing from a serious help zone after going all of 2021 with no check of the 1.3000 psychological stage.
  • CAD/JPY could also be extra engaging for CAD-bulls, and costs are testing a key spot of help across the 90.00 psychological stage for that theme.
  • The evaluation contained in article depends on value motion and chart formations. To be taught extra about value motion or chart patterns, take a look at our DailyFX Schooling part.

It’s a quick begin to the New 12 months because the US Greenback has put in a topside break to begin the yr, pushing increased from longer-term vary help. This has helped to provide a powerful bullish transfer in USD/CAD, simply after a serious help zone had come again into play.

Two weeks in the past, the pair had pushed as much as a key resistance stage of 1.2850. As I had shared on the time, this saved the door open for a transfer as much as resistance on the 1.2950 stage which, on the time, had functioned because the 2021 excessive within the pair. That stage was hit on the next Monday (Dec 20) after which costs then began to reverse.

Because of this USD/CAD went the whole lot of 2021 with out testing the psychological 1.3000 stage. However, it additionally allowed for costs to proceed pulling again till help might come into play at 1.2622, which is the 50% marker of the 2002-2007 main transfer, and this is similar value that had helped to set help earlier in December, with a serious bounce creating after the Financial institution of Canada fee resolution.

USD/CAD 4-Hour Value Chart

USDCAD four hour price chart

Chart ready by James Stanley; USDCAD on Tradingview

USD/CAD Breakout Potential

The 2020-2021 sell-off continues to loom massive in USD/CAD. The pair fell by greater than 2,600 pips in a year-and-a-half, till lastly constructing in help across the 1.2000 psychological stage. The 23.6% Fibonacci retracement from that sell-off is in the identical zone of help that’s at present serving to to carry the lows.

However, it’s the 1.3000 stage that is still of curiosity right here, as that value is confluent with the 38.2% retracement of that main transfer and the psychological stage of 1.3000 was an enormous spot within the pair forward of the 2021 open.

This may hold the door open for bullish eventualities in USD/CAD, in search of USD-strength to retain a desire over CAD-strength.

USD/CAD Weekly Value Chart

USDCAD weekly price chart

Chart ready by James Stanley; USDCAD on Tradingview

USD/CAD Shorter-Time period

Taking a shorter-term have a look at the matter and it might appear that the bullish theme wants a bit extra work earlier than it is perhaps able to go.

The bounce from key help has to date been robust and that’s encouraging. However, costs at this level have merely bounced as much as resistance at prior help, and the 1.2750 stage appears to have slowed the incline. This may set the stage for higher-low help potential later within the week, in search of a push again in the direction of the 1.2621-1.2672 zone, with a higher-low above final week’s 1.2617 low print.

USD/CAD Two-Hour Value Chart

USDCAD two hour price chart

Chart ready by James Stanley; USDCAD on Tradingview

CAD/JPY Bullish Potential

For these in search of eventualities of CAD-strength, meshing up the Canadian foreign money with one thing just like the Japanese Yen could also be extra promising. Whereas the Fed is increased charges in 2022, the BoJ doesn’t appear to be on an identical web page and the continued unfavourable fee regime in Japan might assist to proceed weakening the Japanese Yen. And at this level, CAD/JPY retains some bullish curiosity given the current higher-high and higher-low that printed within the second half of 2021 commerce.

From the month-to-month chart beneath, we will see a previous resistance trendline coming again in as help to assist set the month-to-month lows for November and December. The 38.2% retracement of that transfer plots simply above the 90.00 psychological stage, which is a key zone on the chart.

CAD/JPY Month-to-month Value Chart

CADJPY monthly price chart

Chart ready by James Stanley; CADJPY on Tradingview

CAD/JPY Shorter-Time period

Taking a shorter-term have a look at the pair highlights the significance of the 90-90.24 zone for near-term bullish eventualities. The bullish run has been pretty one-sided for the reason that low was set on December 20th, with however a pause within the transfer because the 90.00 psychological stage got here again into the image. However after buying and selling above 91.00 on New 12 months’s Eve, the pair has pulled again and since discovered help on the Fibonacci stage of 90.24, which was the prior December swing-high.

CAD/JPY 4-Hour Value Chart

CADJPY four hour price chart

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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