USDCAD gained some ground after the aggressive sell-off towards the three-month low of 1.3240, penetrating the long-term ascending trend line to the downside. The technical indicators are feeding prospects for a possible positive short-term trading; the RSI is pointing up below 50, while the stochastic continues to strengthen its momentum.
A decisive close above the 23.6% Fibonacci retracement level of the upward wave from 1.2250 to 1.3664 near 1.3330 could add more value to the pair, pushing the market up to 1.3380. Slightly above this region the 20- and 40-day moving averages (SMAs) currently at 1.3400 and 1.3420 respectively, could provide immediate resistance. Further up, the five-month high of 1.3564 has been a strong obstacle and therefore should be in focus.
In the negative scenario, a reversal to the downside could retest the three-month low of 1.3240. If this prove easy to overcome this time, the decline may next pause somewhere between the 38.2% Fibonacci of 1.3120 and 1.3110.
In brief, although USDCAD is in a slightly bearish mode in the medium-term following the fall below the uptrend line, the short-term trades are currently looking for potential bullish corrections.