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USD/CAD is trading in the red after the failure to take out a resistance area. The CAD has taken the lead again as the USD depreciates on the USDX's sell-off. The pair is trapped within a sideways movement. That's why we have to wait for a valid breakout before we decide to trade this pair.
The Loonie increased as the oil price rallied in the short term. WTI and Brent are developing a bullish engulfing, so a further oil price increase could lift the CAD. It remains to be seen what will really happen because the oil price is still under pressure as the COVID-19 pandemic could continue and the global economy could suffer.
USD/CAD down channel is still intact, so a further drop is favored after several false breakouts above the downtrend line. The price has failed to stabilize above the channel's resistance and above the weekly Pivot Point (1.4181) level. Nevertheless, only a valid breakdown below the 38.2% retracement level and below the S1 (1.4014) will confirm a further drop towards the S2 (1.3839) level and towards the 50% level.
We may have a great selling opportunity from below the 38.2% level and below the S1 (1.4014) level, the targets are seen at S2 (1.3839) level, at the 50% retracement level, or lower at the S3 (1.3672) level, 61.8% retracement level and at the channel's downside line.
Another log opportunity will appear if USD/CAD fails to make a downside breakout from this range between 23.6% and the 38.2% level, and if it escapes from the down channel and after a valid breakout above the pivot point (1.4181) level.
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