The Canadian Dollar Sell-off Should Continue

One of my favorite charts in the world is still the $USDCAD weekly. After a monster breakout to start the year, prices have been consolidating very nicely throughout the past couple of months.

Here are the weekly candlesticks for US Dollar vs Canadian Dollar. Look at the multi-year base that it's been putting in since 2009. Big round bottoms like this create some of the most powerful trends:

Notice the 40-week moving average flatten out a few years ago and then turning higher early last year.

Now look at the short-term view. This is a daily candlestick chart showing a nice clean symmetrical triangle over the past two months. These are typically continuation patterns. A breakout above the upper trendline would confirm that the next leg higher has begun.

Meanwhile, a break below the February lows would signal that further consolidation might be necessary. Outside of that we are still looking at 116 as the initial target. We'll reevaluate things at that point.

Tags: $USDCAD $FXC