HomeContributorsTechnical AnalysisUSDCAD Remains In Short-Term Sideways Channel, Needs Stronger Bullish Signals

USDCAD Remains In Short-Term Sideways Channel, Needs Stronger Bullish Signals

USDCAD has been consolidating since July 20 and has been stuck in a channel with upper boundary the 1.3230 resistance level and lower boundary the 1.2880 support, which overlaps with the 38.2% Fibonacci retracement level of the upleg from 1.2060 to 1.3385. Moreover, the price is trading around the mid-level of the trading range, the 23.6% Fibonacci of 1.3072.

From the technical point of view, the price remains below the 20- and 40-simple moving averages (SMAs) in the daily timeframe, which are ready to post a bullish crossover. The MACD oscillator rose above its trigger line in the negative zone, though the RSI indicator is pointing down near its neutral threshold of 50.

In case of an upward attempt above the 23.6% Fibonacci, dollar/loonie would likely meet resistance at the 1.3230 barrier. A break above the sideways channel would send prices until the 1.3290 resistance level, achieved on July 19. Further gains would push the market until the one-year high of 1.3385.

Immediate support is being provided by the 38.2% Fibonacci mark of 1.2880, which is acting as major obstacle for the bears. If prices dip below of this area, the next support would likely come from the 50.0% Fibonacci around the 1.2730 barrier, taken from the low on May 11. A drop below the 50% Fibonacci level would signal the start of a deeper bearish phase, challenging the longer-term rising trend line again.

In the long-term the bullish outlook remains intact as the pair stands above the ascending trend line, which has been holding since September 2017. The short-term consolidation movement would be erased if the price surpasses the 1-year high of 1.3385.

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