The Canadian dollar is continuing its assault on the USD, extending the gains made over the last seven sessions. With WTI crude oil pricing testing the $60.00 level repeatedly, the positive sentiment is flooding into the CAD. Traders are respecting the prospects of 2018 being a big year for the Canadian economy.

In Wednesday’s U.S. overnight preview, I discussed a key support area for the Loonie. Bears have driven the market south, issuing a firm test of its validity. So far, the level has been up to the challenge.

USD/CAD Technicals

One look at the daily chart and it is not hard to see the pronounced downtrend in pricing. Since the test of 2017’s 50% Fibonacci retracement, the USD/CAD has fallen over 300 pips.

Today’s price action will be pivotal as we close out 2017. If downside support proves valid, we may get the opportunity to sell with the trend off of a Fibonacci retracement during tomorrow’s session. In the event that this market keeps churning south, buys from downside support will come into play.

Here are the two support levels on my radar for the remainder of the week:

• Support(1) 38% Retracement Sept. Low/ Dec. High, 1.2591
• Support(2) 50% Retracement Sept. Low/ Dec. High, 1.2490

Bottom Line: If price remains around the 1.2600 handle, going long on Friday’s open with a stop below today’s low will be a good way to play a bounce off of valid support. In the event that we move substantially from this area, a new set of levels will come into play.

Friday’s session is likely to produce a trade setup for the USD/CAD, either a countertrend play or a Fibonacci sell with the trend is probable. In the meantime, check out the signals page for ideas on how to become active in today’s forex/CFD marketplace.