Of all the forex majors, the Canadian dollar (CAD) may be in the best position to challenge the USD’s bull run of 2018. Economic fundamentals north of the border have prompted the Bank of Canada (BoC) to begin raising rates toward the CAD. Given the nice year in WTI crude oil pricing, the Loonie has begun to apply pressure to the Greenback.

Sometimes taking a step back from intraday time frames is necessary to gain a broader perspective of a market as a whole. Let’s take a look at the USD/CAD weekly chart and scope out the intermediate-term technicals.

USD/CAD Technicals

Since the rally of late-June, the USD/CAD has been consistently falling. BoC tightening and WTI crude values have been primary reasons behind the move. As a result, several key technical support levels are coming into view.

Seasonality has played a big role in the 6-week downtrend in the USD/CAD. Oil is up, the U.S. FED is on holiday until September, and the BoC has been on point. Add it all up and the USD/CAD is testing the yearly trend.

Here are the weekly support levels to watch:

• Support(1): Bollinger MP, 1.2959
• Support(2): 38% Retracement Yearly Range, 1.2950
• Support(3): Weekly SMA, 1.2864

Bottom Line: The 38% Fibonacci retracement of the yearly range (1.2950) is a fantastic place to go long in the USD/CAD. This will be a make-or-break area for this market. If it holds, a return to yearly highs is likely in the cards for the fall season.

I have buy orders queued up from just above the Bollinger MP at 1.2960. Using an initial stop at 1.2894, this trade produces over 100 pips on a 1:2 risk vs reward management plan.

It is an ideal week for this trade given the vacant economic calendar. There are no primary market movers for either the USD or CAD until Friday’s U.S. CPI release. With a bit of luck, this trade will go live by the Wednesday session.