USD/CAD Price Analysis: Buying tails at 20-EMA warrants a resumption of rally

The 20-EMA at around 1.3080 has acted as major support for the counter.
The dismal market mood is supporting the greenback bulls.
The asset may test October high at 1.3978 after overstepping the round-level hurdle of 1.3900.

Sagar Dua FXStreet

The USD/CAD pair is attempting to re-test the critical hurdle of 1.3811 as the risk-off market mood has strengthened further. S&P500 futures have escalated their losses in Tokyo after two consecutive bearish trading sessions, which indicates that the risk aversion theme will stay for a while.

This has also infused fresh blood into the US dollar index (DXY), which has overstepped the round-level resistance of 113.00 in Asia. Also, the 10-year US treasury yields haven’t shown any sign of exhaustion despite a juggernaut rally to near 4.23%.

On a daily scale, the asset has remained in the grip of bulls after breaching the upward-sloping trendline placed from May 12 high at 1.3077. The formation of buying tails after a correction to near the 20-period Exponential Moving Average (EMA) at around 1.3680 indicates that the corrective move is concluded now and the asset will resume its upside journey.

Also, the upside trending 50-EMA at 1.3445 indicates that the upside bias is intact.

The Relative Strength Index (RSI) (14) tested 40.00-60.00 after remaining in the bullish range of 60.00-80.00. A conclusion of the corrective move may drive the momentum oscillator again into the bullish range.

Going forward, a break above Wednesday’s high at 1.3810 will send the asset toward the round-level cushion of 1.3900, followed by the previous week’s high at 1.3978.

On the contrary, a decisive drop by the asset below the round-level support of 1.3700 will drag the asset toward October 6 low at 1.3565. A breakdown of the latter will bring further weakness in the asset towards October 5 low at 1.3504.

USD/CAD daily chart

USD/CAD

Overview
Today last price	1.3786
Today Daily Change	0.0021
Today Daily Change %	0.15
Today daily open	1.3765

Trends
Daily SMA20	1.3722
Daily SMA50	1.3344
Daily SMA100	1.3111
Daily SMA200	1.2905

Levels
Previous Daily High	1.3807
Previous Daily Low	1.3651
Previous Weekly High	1.3978
Previous Weekly Low	1.3703
Previous Monthly High	1.3838
Previous Monthly Low	1.2954
Daily Fibonacci 38.2%	1.3711
Daily Fibonacci 61.8%	1.3747
Daily Pivot Point S1	1.3675
Daily Pivot Point S2	1.3585
Daily Pivot Point S3	1.352
Daily Pivot Point R1	1.3831
Daily Pivot Point R2	1.3897
Daily Pivot Point R3	1.3987

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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