The USD/CAD continues to respect its summer range. The June, July, and August highs all occurred within several pips of 10680. A close look at the USD/CAD rally from 10105 reveals that the advance is an impulse (five waves), therefore, the larger trend is up.
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The current level at 10245 is potential support. The structure of the decline from 10670 at this point is a double zigzag. Reinforcing the bullish bias is the specter of a potential inverse head-and-shoulders (see circles). The 10680 level serves as the neckline.
Price action on shorter time frames is also encouraging. While still quite choppy, our overall outlook is highly constructive and favors additional upside towards 1.1000 over the coming weeks. For now, the latest rallies have stalled out in familiar territory by recent range highs in the 1.0600’s and we would look to take advantage of the current dip to build on long positions. Ultimately, only a close back below 1.0245 would delay the outlook and give reason for pause. The market has been unable to close below 1.0245 so far.
By Jamie Saettele and Joel Kruger, contributors, DailyFX.com
