USD/CAD finds support at 1.2674

FX:USDCAD   U.S. Dollar / Canadian Dollar
Daily outlook - USD/CAD finds support at 1.2674

  • In accordance with one of the scenarios expressed on Friday, the USD/CAD currency pair found support at the 1.2674 level.
  • After spending some in a limbo between this support and a resistance set up by the updated weekly PP at 1.2689, it made an expected breakout to the top.
  • However, now, when the markets a sleepy, the pair has stuck again between the 55-hour SMA from the top and the 100-hour SMA from the bottom.
  • Market sentiment remains 72% bullish , an aggregate technical indicator also send a strong buy signal for the upcoming day.
  • Such clues allow assuming that the pair will try to surge to the 1.2748 level that not only represents a point, from which the Friday downfall has started, but also the weekly R1.
  • In case the pair will suddenly choose the opposite direction, the drop should be neutralized by the approaching 200-hour SMA .
Trade closed: target reached: USD/CAD finds resistance at 1.2748

The way the USD/CAD moved completely matched with the yesterday’s assumption. Namely, after bouncing off from the 1.2674 level, it expectedly surged to the 1.2748, which represented a point from which the Friday’s downfall has started. But since this resistance level also matched with the weekly R1, the currency pair made another rebound.

Even though a number of technical indicators point out that the rate is overbought, an hourly chart suggests that it might make another attempt to break to the top. However, this scenario seems unlikely, because in larger perspective a movement between the above parallel horizontal lines reminds a double top formation.

If this assumption is true, the pair should slip to the bottom once again, before starting to move in a new trend. In contrast, if this figure simply represents a continuation rectangle, the buck should continue to soar in accordance with the 70% bullish sentiment.
Comment: USD/CAD soars to 1.2765
By the moment, it is not very clear, whether yesterday’s overstep beyond the 1.2748 level represents a correction or a sign of continuation of the surge.

If the first case is true, then the pair will slip towards the 1.2674, which represents a bottom boundary of the double top formation.

If the second scenario is true, then the rate has to make a rebound either from the 1000-hour SMA near 1.2723, or from a combination of the 200-hour SMA and the weekly PP at 1.2689. One of these indicators has to provide a necessary impulse to allow the pair advance in the direction of the weekly R2 at 1.2812.

As the market sentiment remains bullish, this scenario might be true. In addition to that, a summary of technical indicators for the 1D timeframe send a strong buy signal.
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