Since the beginning of October, the USD/CAD has been on a tear. Rates have jumped more than 300 pips amid sustained bidding from forex players. At press time, the 1.3100 handle is driving heavy participation as it has for the past three sessions. Is this pair ready to extend the tight weekly range or stay put going into Friday’s closing bell?

USD/CAD Technical Outlook

One look at the daily chart and it is evident that the 1.3100 level is a big deal in this market. It has served as a value area going back as far as late-March, prompting several periods of prolonged consolidation. Given this week’s political uncertainty and slumping WTI prices, it stands to reason that 1.3100 would be on the radar of many currency traders.

Here are the levels to watch in the USD/CAD for the remainder of the trading week:

• Resistance(1): Double-Top Formation, 1.1370-68
• Resistance(2): Psyche Level, 1.3200
• Support(1): Bollinger MP, 1.3062
• Support(2): Daily SMA, 1.3051

Bottom Line: Earlier this week, I issued a short trade recommendation with an entry just beneath the Double-Top pattern. It turned out to be a near miss as rates came within a few pips of entry before reversing.

For the rest of the week, I will be looking to fade the extremes of this market by selling the Double Top and buying downside support. Sells from 1.3164 and buys from 1.3062 each produce 25 pips using a simple 1:1 risk vs reward management plan.