USD/CAD Price Analysis: Bull pennant in the making, 1.3000 seems inevitable
|- USD/CAD finds support from USD rebound, WTI weakness.
- The pair sights a potential bull pennant on the 4H chart.
- 50 and 100 SMAs bullish crossover backs the upswing.
USD/CAD is holding higher ground near the mid-1.2900s, as bulls continue to capitalize on the risk-off flows-driven renewed US dollar upswing.
Meanwhile, the 1% drop in WTI prices, amid risk-aversion and a potential increase in the Russian oil output, weighs negatively on the resource-linked Canadian dollar. Therefore, USD/CAD cheers the oil price weakness heading into a bunch of the US housing and jobs data. Investors also look forward to the Canadian Wholesale Sales data for fresh trading cues.
From a short-term technical perspective, USD/CAD is poised for the additional upside as bulls have spotted a bull pennant formation on the four-hour chart, which will be confirmed on a sustained break above the falling trendline resistance at 1.2947.
On an upside break validation, the pair could advance to retest the 1.3000 supply zone, above which the 1.3050 psychological level could be tested.
The 14-day Relative Strength Index (RSI) is turning lower but holds well above the midline, supporting the case for the upside.
Adding credence to the bullish potential, a 50 and 100-Simple Moving Averages (SMA) bullish crossover, confirmed on Wednesday, remains in play.
USD/CAD: Four-hour chart
On the other side, the bullish 21 SMA at 1.2913 will limit any pullback, a break below which will open floors towards the rising trendline support at 1.2882.
A four-hourly candlestick closing below the latter will lead to the pattern failure, exposing the further downside towards the horizontal 200 SMA at 1.2796.
USD/CAD: Additional levels to consider
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