USD-CAD: Outlook Is Higher Near Term

By Mohammed Isah of fxtechstrategy.com

USD-CAD: A second week of follow-through on a hammer-triggered recovery saw the pair clear 1.0590, its Sept. 17 low, to close higher at 1.0843.

We believe that with its current recovery momentum, the pair will target 1.0991, its Sept. 27 high, in the coming week and eventually break and hold above that level.

If that occurs, further upside toward the Sept. 2 high of 1.1101 is likely.

Above 1.1101, the pair should target 1.1207, where the daily exponential moving average is located. This view is supported by weekly charts, which are trending higher, suggesting further strength.

One important thing to note is that the pair's monthly chart now has a has a hammer candle pattern, which is a bottom reversal signal. This could call into question the pair's broader medium-term downtrend.

Support is located at 1.0590, the Sept. 17 low. Below that, support lies at 1.0434, the Oct. 16 high. If the currency breaches both of those levels, the focus will turn to the year-to-date low at 1.0204. A clean break there would resume the pair's medium-term downtrend toward 1.0100 and then 1.0000.

Overall, with upside momentum being maintained nearer term, further gains are expected in the days ahead.