USDCAD extends trend-like rally toward key resistance
The USDCAD has been trending steadily higher since midday yesterday, with the pair staging a strong, trend-like move to the upside. The rally began near 1.3575 and has extended to a session high of 1.3715 in trading today. The advance has unfolded in a clear three-leg structure, with each push higher building on the prior move.
The most recent leg higher has also been the steepest, highlighting strong bullish momentum in the short term. As often happens in trending markets, the acceleration in the final leg suggests that buyers have been pressing the move aggressively, forcing short-term traders to cover positions while momentum traders join the upside push.
However, the rally has now run directly into a well-defined resistance area, which could determine the next directional move for the pair.
Key resistance zone between 1.3715 and 1.3724
The high today near 1.3715 is technically significant because it corresponds closely with the high from last Thursday and marks the lower boundary of a swing area between 1.3715 and 1.3724.
This zone has proven important repeatedly over the past several weeks. Going all the way back to January 23, multiple rallies have stalled within or near this area, forming a cluster of swing highs that traders now view as a key resistance region.
Because of that history, the 1.3715–1.3724 area becomes a major bias-defining level for both buyers and sellers. If the USDCAD is going to extend its rally, the pair will need to break above this resistance zone and stay above it. A sustained move through the area would likely trigger additional upside momentum and force sellers to reassess their positions.
Sellers defend resistance—for now
So far, sellers have leaned against this resistance area on the first test. The inability to immediately push through the level gives bearish traders some confidence that the rally may be losing momentum in the short term.
Importantly, this is not the first time the market has struggled here. Since January 23, there have been two prior attempts to break higher, and both lasted only a few hourly bars before the price rotated lower again. That history reinforces the idea that this zone is a difficult barrier for buyers to overcome.
For sellers looking for signs that the rally may be exhausting itself, there are additional technical clues worth monitoring. These include short-term momentum shifts, potential failures above resistance, and key intraday support levels that could signal a change in control.
What traders should watch next
In the video above, I take a closer look at the technical signals that sellers may watch for as evidence that the current rally could be nearing an end. At the same time, I outline the levels that buyers must break and hold if they want to keep the upside momentum intact.
For now, the 1.3715–1.3724 resistance zone remains the key battleground that will likely determine the next move in USDCAD.
This article was written by Greg Michalowski at investinglive.com.
