USD/CAD reached a new high at 1.2962, climbing above the line of 6/8 Murray located at 1.2939. This area where 6/8 of Murray is located represents strong resistance for the loonie. It is likely to remain under pressure below this level.
At the beginning of the American session, the USD/CAD pair is trading below 6/8 of Murray showing exhaustion of the bullish force. It is expected that in the next few days there will be a recovery of the pair.
A factor that weakened the loonie was the sharp drop in crude oil prices reaching the low of 66.08 yesterday. A barrel of West Texas Intermediate (WTI) lost almost 6% intraday yesterday on the back of risk aversion and fears for lower demand for energy due to the advance of Omicron and more restrictions worldwide.
We noticed a recovery in crude oil in the last hours, and it could help the loonie to strengthen. So, CAD may fall below 1.2939. If USD/CAD consolidates below 6/8 of Murray in the next few hours, you can sell with targets at the SMA of 21 located at 1.2864.
Additionally, a sharp break and a consolidation below 1.2864 could accelerate the decline of USD / CAD to the support of the uptrend channel located around 1.2750 and up to the 200 EMA located at 1.2704.
On December 20, the eagle indicator touched the area of 95-points which represents an extremely overbought market. It is imminent that in the next few hours there will be a correction in the USD/CAD pair that could give us an opportunity to sell below 1.2940.
Our forecast for the next few hours is to expect the loonie to consolidate below 6/8 of Murray. So, we can sell with targets at 1.2864 (21 SMA) and 1.2750 (bottom of uptrend channel) and finally at 1.2704 (200 EMA). If the pair trades above 1.2962, we should avoid selling.
Support and Resistance Levels for December 21 - 22, 2021
Resistance (3) 1.3061
Resistance (2) 1.3000
Resistance (1) 1.2973
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Support (1) 1.2890
Support (2) 1.2843
Support (3) 1.2808
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A trading tip for USD/CAD on December 21 - 22, 2021
Sell below 1.2939 (6/8) with take profit at 1.2864 and 1.2704 (200 EMA), stop loss above 1.2975.