Technical Analysis – USDCAD records 9-month high; sharp buying interest in short term

USDCAD has advanced considerably over the last four trading days, hitting an almost 9-month high of 1.3071 during today’s European session. Price action at the moment is taking place not far below this peak, having successfully surpassed the 1.3000 strong psychological level. The technical picture supports that the bullish bias is likely to continue in the short-term.

Having a look in the daily timeframe, the technical indicators are holding in the overbought areas. The RSI indicator is moving slightly above the threshold of 70, suggesting that the market could keep moving higher. The MACD oscillator also supports this view as it jumped above its trigger line, posting a bullish cross.

Upsides moves are likely to find resistance at 1.3130. This is the 61.8% Fibonacci retracement level of the downleg from 1.3800 to 1.2060. Slightly higher, the 1.3160 level could act as strong resistance obstacle taken from the low on June 2017. Breaking this level could see a retest of the 1.3350 high.

In the wake of negative pressures, the market could meet support at 1.3000 before it heads lower at the 50.0% Fibonacci mark near 1.2930. A successful close below this level could drive the price towards the 38.2% Fibonacci of 1.2720, but the pair needs to go through the 20-day simple moving average near 1.2840 at the time of writing.

Turning to the medium-term picture, the market seems to be in bullish mode given that the pair trades above the 1.3000 handle. In addition, as long as the bullish cross between the 20 and 40-week SMAs remains intact, the upside rally holds.