April 7, 2021

USD/CAD statistical and technical analysis

Reading time:3 min

The current price of the USD/CAD exchange rate is 1.2621 (April 07, 2021). This pair has slightly corrected its longer-term declining trend in recent months. The Canadian Dollar is a commodity currency and the rising price of oil may be one of the main reasons for the long downward trend. Let’s look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.41% and -0.41%, respectively. Yesterday´s return was only 0.33%. Our scoring is currently negative (-1) for the month-on-month change and 0 for price indexation. This means that we are in a slightly negative phase of the cycle. Both scorings range from -3 up to 3. The estimated cycles development based on our analytical systems is shown in the following chart.

USD/CAD price indexation and cycles estimation
Source: WALFIR

Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly, the green line the 6 months and the yellow line the annual moving average. According to the monthly MA, USD/CAD is in bullish sentiment, after rising above it. As we can see in the chart below, the 6 months and annual MAs are still in bearish sentiment. In the case of growth, a 6-month MA can be an important resistance for the exchange rate.

USD/CAD daily price development
Source: WALFIR

There have been more downward trends since the COVID-19 outbreak. At the beginning of this year, however, a medium-term maximum of 5 consecutive days was reached. Upward trends did not exceed more than 3 days in the same period. The maximum in the measured period is 7 days. We could use the average ATR (Average True Range) obtained from daily data (0.80%) to estimate Stop Loss orders for our positions. The current value is 0.58%. Approximately 90% confidence interval (return between -0.9% and 0.9%) is shown in the histogram below by a red rectangle.

USD/CAD daily return development
Source: WALFIR

We could use the last decile of low to high returns (1.40%) to estimate Profit Targets, as shown in the chart below.

USD/CAD low to high distribution
Source: WALFIR

Basic technical analysis still supports bearish sentiment, as the exchange rate creates lower highs and lower lows. Short-term MA could be the first resistance for this pair. However, we can clearly see the divergence between the market price and the RSI. The USD/CAD is currently also close to the supply zone (red rectangle) with a strong upper part, where the Fibonacci retracement level of 23.60% is. In addition, a psychological level of 1.3000 is above this zone, along with a longer-term MA. This could be an important level of resistance for bulls.

Basic technical analysis of USD/CAD
Source: TradingView


technical analysis
Walfir Technologies

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic systems. The core of the team (Lubos Snirc and Patrik Mackovych) is involved in the Investro project. Both have experiences in global financial and investment analytics and their articles and analyzes can be found on major financial news portals.


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