Multiple timeframe analysis can be a valuable tool for placing short-term moves into a broader context. In the midst of the recent buyback of the USD, one of the strongest performers on the forex has been the USD/CAD. Today’s disappointing Retail Sales numbers out of Canada have helped extend the trend, bringing robust topside resistance into play.

On a side note, WTI crude is posting a considerable rally after an early-session sell-off. If the positive price action continues, we may be in for a retracement in the USD/CAD.

USD/CAD Technicals

It is very easy to get caught up in the details of intraday or daily technicals and forget all about the big picture. When markets are active and moving, it is usually productive to take a step back and enjoy the view from 10,000 feet.

Observation of the Loonie’s weekly chart places the recent bull run into context. On shorter timeframes, it appears as if this is a northbound freight train. However, price is only near the 38% Fibonacci retracement of 2017’s range.

Here are the key numbers from the weekly chart:

• Resistance(1): Weekly SMA, 1.2705
• Resistance(2): 38% Retracement of 2017’s Range, 1.2722

Overview: The difficult aspect of going short while adhering to weekly technicals is cost. It is expensive to take these trades, as large stop losses are necessary for proper execution. Therein lies the beauty of multiple time frame analysis — we are able to reference smaller durations and properly align risk to reward.

The USD/CAD stalling out near the 1.2700 handle is highly probable. Tomorrow’s release of the Canadian CPI may provide the participation necessary for a directional move. If today’s range sets up properly, a position short using the session high as a concrete stop may be in store going into the weekend.