The USDCAD moved higher in the North American session and in doing so, stretched to a “Red Box” high: that has limited the pair going back to mid-December (see the table below). That rate comes in at 1.44666. The high price stopped just below that level at 1.44635.
On the other hand, earlier in the 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 new moving averages in the middle of the Red Box range including the
- 100-hourly 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 range between 1.4373 and 1.43828 represents a key barometer between the extreme end of the Red Box.
Today, the price – after finding sellers near the extreme, turned lower and found willing buyers against the browser's moving average near the middle of the trading area from mid-December.
So resistance is held and support is held, and that increases those levels important not only today but going into next week. The decision rule is for traders
- A move below the group's moving average is more bearish. On a break below, look for a distribution that could bring the price down to the lowest level in the very end of the red box.
In contrast,
- It is more optimistic to stay above the group of moving average. Targets include 1.4435 and then the swing area near the top of the red box between 1.4448 and 1.4466
At some point, the price of the USDCAD will break outside the Red Box area with a trend. Until then, the traders are playing the extreme with the MA group between being more bullish or more bearish.
