USD/CAD holds within SMAs; sharp move up needed for more gains

Melina Deltas, CFTe XM

USDCAD came to close to break the 40-day simple moving average (SMA), surpassing the 23.6% Fibonacci retracement level of the upward movement from 1.2060 to 1.3663, around 1.3285, earlier today. The positively aligned Tenkan-sen line serves as a testament to the bullish short-term momentum that is in place. The technical indicators also suggest a positive bias as the RSI entered in bullish territory, while the MACD is rising above the trigger and zero lines.

Should the price stretch north, Thursday’s highs and the 40-SMA could provide immediate resistance around 1.3330 before the pair touches the 1.3370 resistance level. A significant step higher could bring the bullish sentiment back into play, sending the prices towards the 19-month high of 1.3663.

On the other side, the price could challenge the flat 20-day SMA near 1.3240 before heading lower towards the 1.3190 support barrier. If traders continue to sell the pair, the price could fall until the 1.3050 – 1.3070 area, which encapsulates the 38.2% Fibonacci mark. A drop below this key zone would reverse back to the downside, continuing the bearish correction until the 1.2910 region.

Summarizing, dollar/loonie has been developing in an ascending movement since September 2017 in the long-term, while over the last two months the price has been creating a negative tendency, following the pullback from the 19-month high.

Author

Melina Deltas, CFTe

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups.

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