USDCAD has been in an uptrend since forming a low in late July 2011. In 19 March 2014 article we discussed the possibility of the pair to rise to 1.1300 level. Last Thursday the market came very close to the key level of 1.1300 discussed with a high of about 1.1285. In this article we take a closer look at the longer term weekly chart and see why the 1.1300 level is an important key level which could act as a significant resistance level.
Looking at the longer term weekly chart, there is a confluence of Fibonacci ratios at the 1.1300 level. On the weekly chart, the line segment AB, drawn from the low reached in late July 2011 to the swing high reached in late September and early October 2011, when this line segment is projected from the low reached in September 2012, indicated by the point C on the chart, the 127.2% Fibonacci price projection comes around the 1.1300 level. Also the line segment shown as BC on the weekly chart, the 161.8% Fibonacci expansion comes around the key 1.1300 level being discussed. This forms a zone of Fibonacci ratios confluence zone. It is likely that this level would prove to be a significant resistance level to over come, with the potential, if the market is not able to have a good close above this level, it might form a zone for a reversal. To further zoom into the price formation, we also look at the daily chart.
USDCAD (Weekly chart):
Taking a closer look by zooming into the daily chart. The daily chart shows a possibility of a Butterfly pattern with the 127.2% Fibonacci expansion of the swing down represented by the line segment XA on the chart. Also the line segment BC has a Fibonacci expansion of 141.4% around the 1.1300 resulting in the pattern. 1.1300 level must be watched closely. Last Thursday, the price formed a Doji (indecision) and last Friday, price was unable to take the high out and closed below the low of the Thursday resulting in a variation of a shooting star candlestick pattern.
USDCAD (Daily chart):