USDCAD moves higher into resistance and lower into support. The key levels remain in play.

[forex4you]

USDCAD moves higher into resistance and lower into support. The key levels remain in play.

The USDCAD moved higher in the North American session and in doing so, stretched to the high of a "Red Box": that has confined the pair going back to mid-December (see chart below). That level comes in at 1.44666. The high price stalled just short of that level at 1.44635.

Conversely, earlier this week, the price tested the low of that Red Box at 1.42969 after the US CPI data, but found willing buyers. The low price on that day reached 1.4301.

Yesterday, the price of the USDCAD moved back above a cluster of moving averages new the middle of the Red Box range including the

• 100-hour moving average (at 1.4373)
• The 200-hour moving average (currently 1.4381) and the
• 100-bar moving average on the 4-hour chart (currently at 1.43828)

That area between 1.4373 and 1.43828 represents a key barometer between the extremes of the Red Box.

Today, the price - after finding sellers near the high extreme, rotated lower and found willing buyers against the cluster moving averages near the middle of the trading range since mid-December.

So resistance held and support held, and that increases those levels importance not only today but going into next week. The decision rule for traders is

• Move below the cluster moving averages is more bearish. On a break below, look for a rotation that could take the price down to the low of the Red Box extreme.

Conversely,

• Staying above the cluster of moving averages is more bullish. The targets include 1.4435 and then the swing area near the high of the Red Box between 1.4448 and 1.4466

At some point, the price of the USDCAD will make a break outside of the Red Box area with momentum.  Until then, the traders are playing the extremes with the MA cluster in between acting as a rudder for more bullish or more bearish.

                This article was written by Greg Michalowski at www.forexlive.com.

Source: USDCAD moves higher into resistance and lower into support. The key levels remain in play.

forexlive.com