- USD/CAD traded with a negative bias through the early North American session.
- The overnight breakout through falling wedge resistance favours bullish traders.
- Any further slide to the 1.2700 mark might still be seen as a buying opportunity.
The USD/CAD pair witnessed some selling on Tuesday and extended the previous day's rejection slide from the 1.2835 confluence resistance. The mentioned region comprised of 200-period SMA on the 4-hourly chart and the 61.8 Fibonacci level of the 1.2958-1.2630 recent downfall.
The pair remained depressed through the early North American session, albeit managed to rebound around 30-35 pips from lows and was last seen trading near the 1.2760-65 area. Given the overnight breakout through a falling wedge, the near-term bias remains tilted in favour of bullish traders.
The constructive outlook is further reinforced by bullish technical indicators on the 4-hourly chart. That said, oscillators on the daily chart – though have been recovering – are yet to confirm the bullish bias. This, in turn, warrants some caution before placing fresh bullish bets.
In the meantime, any subsequent slide is more likely to find decent support and attract dip-buying near the 23.6% Fibo. level, around 1.2700 round-figure mark. The mentioned level also marks the bullish wedge resistance breakpoint and should now act as a key pivotal point for short-term traders.
This is closely followed by the 1.2685-80 horizontal support, which if broken decisively will negate prospects for any further appreciating move. The USD/CAD pair might then resume its bearish trajectory and slide back towards challenging multi-year lows, around the 1.2630 region touched last week.
On the flip side, immediate resistance is pegged around the 1.2790-1.2800 region (50% Fibo. level) ahead of the overnight swing highs. A sustained move beyond has the potential to push the USD/CAD pair further beyond the 1.2875-80 intermediate resistance, towards reclaiming the 1.2900 mark.
USD/CAD 4-hourly chart
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Technical levels to watch
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