On August 20, the USD / CAD pair peaked at 1.2948, the highest level since December 2020. Since that day, the pair has been making a correction and has finally reached the 200 EMA zone located at 1.2573.
In a few days, the loonie has strengthened by more than 350 pips. The rally of oil prices of more than 600 pips from the low of 62.00 has given strength to the USD / CAD pair. Now it could be in a zone of a probable technical rebound.
Investors are cautious and prefer to stay on the sidelines ahead of Fed Chairman Jerome Powell's speech at the Jackson Hole Symposium.
This event is an important factor for the currency market. So, it could be limiting the strength of the Canadian dollar, justifying some caution before positioning for any further movement.
According to technical analysis, traders have the same sentiment on USD/CAD as we observe that the pair has found some support near the key support of the 200 EMA and has been bouncing above this level since yesterday.
The 21 SMA located at 1.2658 is exerting some downward pressure. Therefore, a pullback towards this level will be a good opportunity to sell. A little higher is the 4/8 line of murray that has now become strong resistance.
On the other hand, a break below 1.2573 (200 EMA) will open the possibility of a new bearish sequence that could reach the 2/8 murray support level located at 1.2451.
The key point until Friday is to wait for a consolidation above the 200 EMA. Whenever there is a bounce at this level, it will be a good opportunity to buy with targets at 1.2695 and up to 1.2817.
Support and Resistance Levels for August 26 - 27, 2021
Resistance (3) 1.2748
Resistance (2) 1.2686
Resistance (1) 1.2664
----------------------------
Support (1) 1.2570
Support (2) 1.2545
Support (3) 1.2506
***********************************************************
Trading tip for USD/CAD for August 26 - 27, 2021
Buy above EMA 200 at 1.2573 with take profit at 1.2695 (4/8) and stop loss below 1.2538.
Sell if the price makes a pullback 1.2695 (4/8) with take profit at 1.2630 and 1.2573 (3/8), stop loss above 1.2730.
