USDCAD switched to consolidation after its exponential advance above a bullish channel topped at 1.3831. Of note, the area coincides with the 61.8% Fibonacci retracement of the March 2020 – June 2021 downtrend.
Encouragingly, the 1.3600 region helped the market to retain some weekly gains, but with the RSI and the stochastics hovering in overbought waters, it’s questionable how far the rally could still go. Nevertheless, with the indicators remaining elevated within the bullish territory, there might be some room for further improvement before the next bearish wave starts.
Should the pair propel buying interest above the key resistance area of 1.3725–1.3831, the rally could pick up steam towards the 1.4000–1.4035 region taken from March-May 2020. Breaching that wall too, the next barricade could pop up around 1.4140.
Alternatively, a downside reversal may retest the support of 1.3600. If that proves easy to break this time, the sell-off may continue towards the 1.3500 round level. Moving lower, the 20-day simple moving average (SMA) at 1.3347 will attempt to keep the broad outlook positive above the channel.
In brief, USDCAD is preserving a bullish outlook in the short- and long-term picture, though with the price trading within overbought territory, fears that the uptrend has peaked may keep weighing on market sentiment.