USD/CAD aims for more progress near 200-SMA [Video]
|USDCAD has been rising on the support of the red Tenkan-sen line this week, reaching the limits of the 200-day simple moving average (SMA) and the 50% Fibonacci of the 1.2006 – 1.2947 upleg at 1.2477.
The compression in Bollinger bands foreshadows a significant change in volatility ahead, with the momentum indicators signaling that the breakout could be on the upside. The RSI has crawled above its 50 neutral mark, the MACD is recovering above its red signal line, and the Stochastics are sloping upwards, all painting a rosy picture for short-term trading.
If the price snaps the 1.2477 barricade, the spotlight will fall on the 50-day SMA at 1.2540. Breaching that line too, the bulls will next head for the 38.2% Fibonacci of 1.2588 and the 1.2616 hurdle, while higher, a tough resistance could develop between the broken neckline of the head and shoulder pattern at 1.2700 and the 23.6% Fibonacci of 1.2725.
Alternatively, if selling pressures resurface, the red Tenkan-sen line currently at 1.2386 could immediately take action with the help of the 20-day SMA (middle Bollinger band). Failure to pivot here could see the price swiftly diving towards the 1.2305 floor. Another step lower would dampen the short-term outlook, bringing the 78.6% Fibonacci of 1.2207 next into view.
In brief, USDCAD has the potential to further progress in the near term, though only a break above 1.2477would activate new buying orders.
Note Canadian and US jobs data will be out at 12:30 GMT today.
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