- USD/CAD starts the week with a support test.
- The pair held a big spot of support last week even as USD was selling-off. Can bulls keep sellers at bay?
- This article is based on chart formations and price action. To learn more about price action or chart patterns, check out our DailyFX Education section.
Last week was a tough one for the US Dollar as the currency was offered heavily after Jerome Powell's speech at Jackson Hole. In USD/CAD, however, the move appeared to be somewhat abbreviated as the pair merely pushed down to another big spot of support and held.
However, bears already took a short weekly dip below this level last week. For now, prices are above trendline support. However, the recent lower high and this morning's test for a lower low may indicate that there is some potential for bearishness in the pair.
USD/CAD FOR 4 HOUR PRICE CHART
Last week's chart showed USD/CAD re-testing an important spot that has been in-play since 2021 trade. This zone runs from the psychological level at 1.2500 to a few confluent Fibonacci levels between 1.2620-1.2632. This is the 23.6% retracement for the 2020-2021 selloff, while the first level is the 50% marker for the 2002-2007 major pair move.
This price area held support at the 2021 level and quickly became resistance in March, April and May. Both July and August saw breakouts above this level, but bulls quickly returned, and prices quickly returned to the zone to grind support.
This will allow for long-term bullish strategies in this pair. These strategies would seek to reverse the previous bearish trend which ran from March last year through June this year.