Canadian Dollar Price Action Setups: USD/CAD, CAD/JPY, EUR/CAD

Canadian Dollar Price Action Setups: USD/CAD, CAD/JPY, EUR/CAD

Canadian Dollar Talking Points:

  • USD/CAD has pushed down to a fresh monthly low and then stalled. Price is testing a key spot of confluent support and if that doesn’t hold, next support is a little more than 100 pips lower.
  • CAD/JPY has spent the past few weeks battling with resistance, allowing for the build of a symmetrical triangle formation.
  • EUR/CAD appears to be attempting a reversal after a year-long trend saw the pair shed more than 2,000 pips. A strong reversal last Friday puts the focus back on the long side of the pair with the 200 day moving average sitting overhead.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

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USD/CAD has both a double top and a double bottom formation on the weekly chart, and neither has begun to fill-in yet, which keeps the door open for a large move at some point. The only question is which side as both double tops and double bottoms require a break of the neckline before triggering; and the distance between the two is a massive 2,600 pips.

Resistance printed in March of 2020, right at the same high of 1.4660 that had held the high back in January of 2016. This is also around the 78.6% Fibonacci retracement of the 2002-2008 major move; and after that resistance hold, sellers went on the attack for the next 14 months until eventually finding support at the six year low in May of last year. That bounce led into this year’s USD run and at this point, more than half of that move has been erased.

USD/CAD Monthly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD Shorter-Term

After appearing to lag USD trends for much of the summer, USD/CAD put in a sizable breakout in the month of September, finally scaling back-above the 1.3500 level on the way to setting a fresh two-year-high last month.

Since then, however, prices have been pulling back and we’ve seen about 50% of that breakout move erased. USD/CAD on the weekly chart is attempting to hold support at a confluent spot, ranging from the 1.3462 level that serves as the 61.8% retracement on the same move looked at above, spanned up to the 1.3500 psychological level.

USD/CAD Weekly Chart


Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD Even Shorter

Going down to the four hour chart highlights this zone already being in-play. That support started to be tested on Friday morning and it’s still holding today, even amidst a strong run of USD-weakness that’s taken-hold through Friday and Monday trade.

This keeps the pair as an interesting candidate for USD-strength plays. But, bulls are going to need to act rather quickly as a series of lower-highs since that bounce started to appear makes for a descending triangle formation – which is bearish. And, if that fills, there’s another confluent area on the chart, with a couple of Fibonacci levels around a prior swing high and this plots around 1.3350.

If the bearish break play does come in, that 1.3350 area becomes a more attractive area of potential support. Because, unlike the 1.3500 area that hasn’t produced a bullish response yet, short-term reversal plays could be sought on a support test at 1.3350.

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USD/CAD Four-Hour Price Chart

image3.pngChart prepared by James Stanley; USDCAD on Tradingview


When Yen-trends were in full drive during the summer, CAD/JPY flew-higher, eventually running into the 110.00 psychological level in early-September. Two months later that resistance remains and we’ve even had a series of lower-highs show up of recent.

I wouldn’t quite consider this a double top given asymmetry at the highs, but the fact that the most recent test above 110 produced a lower-high doesn’t exactly strengthen then bullish case.

CAD/JPY Weekly Chart


Chart prepared by James Stanley; CADJPY on Tradingview

CAD/JPY Shorter-Term

From the daily chart below we can see a symmetrical triangle in CAD/JPY that’s built after that most recent failure above the 110.00 handle. And the bullish trajectory still remains but there are a couple of nearby levels that can start to open the door to reversal scenarios.

On the above chart, I pointed out that swing low on the weekly around 104.57; but from the daily we can pull another level from an area of resistance-turned-support-turned-resistance at 106.81. A break below that opens the door for a move down towards the 1.0500 psychological level, and if sellers can evoke a deep enough push, a breach of 104.57 opens the door to a bigger picture reversal scenario.

CAD/JPY Daily Price Chart


Chart prepared by James Stanley; CADJPY on Tradingview


Like most other Euro-pairs, EUR/CAD has spent much of the past year in varying forms of sell-off. At this point, there’s hope of recovery as a recent higher-high has opened the door for higher-low support, which could open the door to an extended recovery move. Last week’s low reacted at an area of prior highs and this keeps the door open for topside potential in the pair.

The past few weeks have seen EUR/CAD attempting to climb back-above the 200 day moving average, which is currently functioning as resistance.

EUR/CAD Weekly Price Chart


Chart prepared by James Stanley; EURCAD on Tradingview


From the daily chart below we can get a better view of price interacting with the 200 dma. This also puts into scope last week’s support test at prior resistance; which highlights price action not quite recovering from last week’s spill as of yet. We’ll go down to a shorter-term chart next to get more detailed.

EUR/CAD Daily Chart


Chart prepared by James Stanley; EURCAD on Tradingview

EUR/CAD Shorter-Term

From the four-hour chart below we can put that move from last week into scope, and we can also see how key the 200 dma is to the current trend. Price has pulled up just shy of a test there but is currently trying to hold short-term higher-low support around the 50% mark of last week’s move. This keeps the door open for topside potential, looking for a re-test back above the 200 day moving average which opens the door for a move up to 1.3600. If that can trade, then 1.3700 is the current five month high, and there’d be both a higher-high along with confirmation of a higher-low area of support. This could keep the door open for further recovery potential.

EUR/CAD Four-Hour Price Chart


Chart prepared by James Stanley; EURCAD on Tradingview

— Written by James Stanley, Senior Strategist, & Head of DailyFX Education

Contact and follow James on Twitter: @JStanleyFX

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