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Double top and double bottom in the trading range this week
The USDCAD has extended above its 200 hour moving average at 1.2757 after trading above and below the moving average level for most of the London afternoon/NY early morning session. The price high has extended up to 1.27853. We currently trade at 1.2779.
For the week, the low to high trading range has only been around 102 pips. That is the lowest trading range since February 2020.
Looking at the hourly chart the price action has also had a number of up and down moves. The high price was reached on Monday at 1.27889. The lows were reached on Tuesday and again on Thursday at 1.26874. In between on Wednesday, the price returned back up to a high of 1.27888. Going back to last Friday the high price reached 1.27918.
So for the week, there was a double top, and there was a double bottom with plenty of up and down volatility in between.
So what next?
Non-trending leads to trending. One can argue that the trending started on Thursday to the upside. Today we saw the extension above the 100 hour moving average and 200 hour moving average. The next step is to get and stay above the swing high area at 1.278882 to 1.27918. Get above and traders will start to target the 1.28249 to 1.28326 area (as a start).
However, if the sellers lean again, and the price rotated back below the 200 and 100 hour moving averages, the bias and tilt more to the downside once again.
Higher oil prices and dollar selling has helped to weaken the USDCAD pair of late. The dollars decline has caught the attention of central bankers however, and that seems to have given some cause for pause.
Nevertheless, let the price action – and the tools applied to the price action – help to tell the story. For now, in the USDCAD, the buyers are making a play, but need the next shove.