USD/CAD Price Analysis: Falling wedge breakout supports prospects for additional gains

A combination of factors assisted USD/CAD to gain strong positive traction on Monday.
The momentum assisted the pair to confirm a bullish breakout through the falling wedge.
Mixed oscillators on hourly/daily charts warrant caution before placing aggressive bets.

Haresh Menghani FXStreet

The USD/CAD pair built on its recent bounce from multi-year lows, around the 1.2630 region and gained strong positive traction on the first day of a new trading week. The momentum pushed the pair further beyond a short-term descending trend-line resistance, confirming a near-term bullish breakout through a falling-wedge chart pattern.

Meanwhile, technical indicators on hourly charts have been gaining positive traction and support prospects for additional gains. Hence, some follow-through strength beyond the 1.2800 mark, towards testing 200-period SMA on the 4-hourly charts, looks a distinct possibility. The mentioned barrier is pegged near the 1.2830 region.

A stronger USD and a pullback in crude oil prices add credence to the positive outlook. That said, oscillators on the daily chart – though have been recovering from the negative territory – are yet to confirm the bullish bias. This might hold bulls from placing aggressive bets and keep a lid on any further gains for the USD/CAD pair.

This makes it prudent to wait for a sustained move beyond the 1.2830 region before confirming that the pair has bottomed out in the near-term and positioning for any further appreciating move. The USD/CAD pair might then aim to reclaim the 1.2900 round-figure and climb further towards the next relevant hurdle near the 1.2955-60 region.

On the flip side, any meaningful slide is likely to find decent support and attract some dip-buying near the wedge resistance breakpoint, around the 1.2720-10 region. Failure to defend the mentioned resistance-turned-support might prompt some technical selling and accelerate the fall back towards the 1.2675-70 congestion zone.

USD/CAD 4-hourly chart

Technical levels to watch

USD/CAD

Overview
Today last price	1.2753
Today Daily Change	0.0053
Today Daily Change %	0.42
Today daily open	1.27

Trends
Daily SMA20	1.2771
Daily SMA50	1.2907
Daily SMA100	1.3057
Daily SMA200	1.3367

Levels
Previous Daily High	1.2743
Previous Daily Low	1.2659
Previous Weekly High	1.2798
Previous Weekly Low	1.263
Previous Monthly High	1.301
Previous Monthly Low	1.2688
Daily Fibonacci 38.2%	1.2711
Daily Fibonacci 61.8%	1.2691
Daily Pivot Point S1	1.2658
Daily Pivot Point S2	1.2616
Daily Pivot Point S3	1.2573
Daily Pivot Point R1	1.2742
Daily Pivot Point R2	1.2785
Daily Pivot Point R3	1.2827

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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