Do they always come back?

Today we look at the #USDCAD pair. And as is tradition, we’ll start with the monthly chart. The relative stability of the pair’s movement in a wide range between 1.2 and 1.36 seems to be coming to an end. Previous attempts to break out higher have been suppressed by the influence of market makers, as this pair prefers strong impulses, after which the other side of the transaction is empty and market maker intervention becomes inevitable, after which the pair begins to reverse movement. The current pattern so far is very different from the usual behaviour of the pair, and is more reminiscent of the 2011–2014 movement, when the pair began to rise after a deep decline to the 0.95 level. If this comparison is correct, then it is very likely that the pair will cross the 1.46 level on the third attempt, unless it accelerates like a rocket. Perhaps it will, or perhaps the 1.46 threshold is an insurmountable obstacle at this stage. Only time will tell if and when the pair gets closer, but for now it is trading near the upper limit of the range at around 1.365.

Let’s take a look at the daily chart and see what could happen in the coming weeks. As usual, there are two possible scenarios and I will give arguments for and against both options.

Option one — growth, arguments for, they are also arguments against a decline:

• An attempt to move lower after the 13th October high, stumbled on support at 1.325 and has now bounced back four times;
• The decline in the pair after the 13th was due to the weakness of the US dollar, not the strength of the Canadian dollar, look at other pairs with the USD;
• Both moving averages continue to rise, meaning that the average closing price continues to rise;
• there is no strong upward break of the 100-day moving average on the chart, so there are both sellers and buyers in the market, reducing the likelihood of market maker intervention;
• the cost of oil, Canada’s main export to the US, continues to fall, which also indirectly affects the value of the Canadian dollar;
• the existing trade imbalance between the US and Canada is easily offset by the appreciation of the US currency.

Perhaps this list is not exhaustive, you can think for yourself.

Option two — decline, arguments for, they are also arguments against growth:

• The previous attempt to rise above the local high of 13 October failed and the price retreated;
• The moving averages clearly show a decrease in the angle of inclination, which means a slowdown in the growth of the average closing price of the daily candles;
• it is possible that the hope of continued growth will lead to the appearance of additional buyers and thus an excellent opportunity to obtain counter-liquidity for large sellers;
• if the Fed stops tightening monetary policy for fear of a recession, then the US dollar will begin to weaken and the pair will fall.

Again, this list is not complete, but I would like to point out that all the reasoning takes place right up to the moment when the pair approaches the key price levels — the minimum and maximum on the charts, and it is only from the price behaviour at these points that further events can be judged. . In the meantime, the pair is growing and may continue to do so for some time.

Finally, we turn to the hourly chart. Here we can see a pattern typical of an uptrend — each new low is higher than the previous one, and each new high is also higher than the previous one. The pair is moving up in parallel with the hourly moving averages. As soon as we see that the next low is lower than the previous one, and the new high is also lower than the previous one, we can say that the uptrend has turned into a downtrend, but it is impossible to understand how long this decline will last. With each dip, new buyers will emerge and push the price up, with each rise, new sellers will emerge and push the price down, but only the subsequent movement of the chart will show who will be stronger.