Morning Market Update – USD/CAD

USD/CAD‘s consolidation from 1.2537 is still unfolding and the intraday bias stays neutral. In case of another recovery, the upside should be limited by 1.2626 support turned resistance. As noted before, the corrective action from 1.2537 has already seen some rise, with the price action producing a pin bar completed at the support area.

With the minor support intact, a further rise is still expected in USD/CAD. Sustained trading above support will pave the way to retesting the 1.2626 levels. The 1.2626 levels indicate a short term upside, with the oscillator in the 4-hour chart rising above 27.0 level. In such case, a stronger rebound would be seen at the 1.2626 resistance zone first, before making any further rise.

Looking at the bigger picture, the price actions from 1.2537 medium-term bottom are seen as a correction in the pattern. The first leg should have finished at 1.2580. Break of 1.2580 will favour such correction to 1.2626. At this point, we’d look for strong support from there to contain the downside movement and bring a rebound. A firm break there will target a 100% projection of 1.2626.

The dollar showed some sign of recovery as the market continues to consolidate from the current levels. The upside movements are characterized by strong bull candles, and any recovery up-days are beset with some struggles to make any headway, and turn into consolidation days. The latest pin bar candle was another consolidation where the bulls are looking to make any sustainable impact before resuming the upside movement once more. The daily momentum indicators have all now taken on a corrective outlook, with the Stochastic above 20. The pair is now back into the old pivot band 1.2551, so it will be interesting to see the reaction. The likelihood is that the 1.2537 support which has often been seen as an inflection point will now be tested.

The four-hour chart shows that the resistance at 1.2626 is bolstered now as a key level, with initially an area of near term overhead.

The USD/CAD pair will attempt to breach 1.2580 level first and should manage to settle above it, showing a slight bullish bias settled near the mentioned level. The stochastic got rid of its negativity to move near the oversold levels, which supports the chances for bouncing higher to resume the bullish trend on the short term basis.

Therefore, our positive expectations will remain valid in the upcoming period, supported by the price action that keeps carrying the price from below. We’d like to remind you that next target is located at 1.2580, while the stability above 1.2580 represents an important condition for the continuation of the suggested rise.

Expected trading range for today is between 1.2481 support and 1.2626 resistance.

Expected trend for today: Bullish
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