The possible uprising of USDCAD, 4hr1. Technical Analysis
• Trendline + Horizontal Support
A clearly defined uptrend line, drawn from the March ’24 low through the August and April pullbacks, intersects the 1.3810–1.3850 area. That same zone has flipped from support to resistance and back again over the past year, marking it as a high‑probability reversal point.
• Bullish Divergence
On the 4‑hour RSI, the most recent price low dipped slightly below March’s low while RSI held higher. This divergence at a key support zone suggests selling momentum is exhausted and buyers may be stepping in.
• Entry, Stops & Targets
• Entry: Look for a clean bullish 4H candle (pin bar, engulfing bar, etc.) around 1.3820–1.3850, where trendline and horizontal support converge.
• Stop: Place below 1.3680, under the April swing low and next structural demand area.
• Target 1: 1.4168 (recent mid‑range swing high)
• Target 2: 1.4467–1.4542 (major supply zone from late 2024)
This setup offers roughly a 1:4 risk‑to‑reward ratio if both targets are reached.
• Higher‑Timeframe Confirmation
A daily close back above 1.3850 would reinforce this zone’s support role. Wait for that or a clear 4‑hour bullish pattern before committing.
2. Fundamental Analysis
• Oil Price Pressure
WTI has slid toward the low‑$60s on OPEC+ supply increases and softer Chinese demand. With Canada heavily reliant on oil revenues, lower crude prices tend to weaken CAD against USD.
• Policy Divergence
The Bank of Canada remains on hold at 2.75% and markets anticipate cuts later in 2025, while the Federal Reserve holds funds rates at 5.25–5.50%. That yield gap supports USD strength.
• Growth Differential
Canada’s Q1 GDP underperformed expectations—soft energy and mining output—whereas U.S. growth is still running near 2–3%. The disparity favors USD.
• Risk Sentiment
Elevated U.S.–China trade tensions and global growth concerns have nudged markets into risk‑off mode, a backdrop in which USD typically outperforms commodity‑linked currencies like CAD.
Bottom Line
With a multi‑touch trendline and horizontal flip level converging around 1.3820–1.3850, coupled with RSI divergence and dovish CAD fundamentals versus a still‑hawkish Fed, this is a textbook long setup. Wait for a convincing 4‑hour bullish signal in the zone, use a stop under 1.3680, and target 1.4168 first, then 1.4467–1.4542.
