USDCAD repeated last week’s impressive performance and is set to close strongly green for the second consecutive week near two-month highs.
The pair has also crawled above the Ichimoku indicators and its moving averages, giving positive trend signals, while according to the MACD oscillator bullish momentum is likely to continue in the short-term as the indicator is far above its red trigger line. The fast-stochastics, though warn over an overbought market as the green %K line and the red %D line are ready for a bearish cross above 80, a sign that downside corrections may emerge in the very short-term. The slowing RSI is adding to the cautionary note.
Should negative pressure resume, immediate support could be found within the 1.3373-1.3328 area identified by the January 24 peak and the 38.2% Fibonacci of the upleg from 1.2781 to 1.3663. Moving lower, the 50% Fibonacci of 1.3222 could come into view once the pair overcomes the 50-day MA (1.3280) which has been somewhat restrictive in the previous month. Another key barrier is likely to appear within the 1.3170 and 1.3118 walls, with the 200-day MA also positioned close to the lower band of this range at the moment.
Alternatively, an extension higher could retest the 1.3540 previous resistance level before the spotlight turns to the 1.36 zone and more importantly to the 19-month high of 1.3663. A decisive run above this peak could lead to a stronger battle between 1.3720 and 1.3792, where the previous high of the November downfall is placed. The neutral medium-term picture would also switch to bullish in this case.
Summarizing, the immediate risk is tilted to the downside, with the short-term bias remaining positive. In the medium-term, the outlook holds neutral.
