USDCAD - poised to resume uptrend

USDCAD pivoted off the highs of 1.3661 at the beginning of the year, and has been consistently moving sideways for extended periods of time, on the backdrop of a macro uptrend since 2011. The second time prices took a turn lower was at the beginning of June when USDCAD was sitting at 1.3529 level and hit a low of 1.3019 within a span of 1.5 months. Since then, prices have been caught in a range. Despite that, multiple indications are pointing to an impending upwards move, resuming the larger trend in place.

From the perspective of the daily timeframe, the near-complete formation of a pennant may be observed, with prices sitting on the lower band of the pattern that serves as a strong support. The pennant is known as a continuation pattern, which means a break of the pattern in the same direction as the overriding trend is likely to occur. In this case, the pennant will likely be the catalyst for a move higher.

The daily stochastics oscillator (5,3,3) seems to work extremely well in spotting a reversion from a low when the oscillator falls below 20. It is a directional indicator as well as a measure of momentum. A reading above 80 signifies an overbought condition while a reading below 20 represents an oversold condition.