Looking at the technical picture of USD/CAD on our 4-hour chart, we can see that the pair is forming somewhat of a bullish flag pattern. On Friday, the rate accelerated sharply to the upside, creating a so-called “pole”, after which the pair started moving sideways. These tend to be continuation patterns, so there is a chance we could see another push higher in the near term. But the upside could end up being limited due to the short-term downside resistance line taken from the high of October 10th. For now, we will take a cautiously-bullish approach and aim for slightly higher levels.
If the rate makes a move higher and breaks the 1.3270 barrier, which is Friday’s high, this could open the door for a further move north, possibly targeting the 1.3298 hurdle, marked by the high of December 4th. Initially, USD/CAD might get a hold-up around there, but if the buying continues, a break of that hurdle may send the rate to test the aforementioned downside line, or the 1.3320 level, marked near the highest point of December.
Our oscillators, the RSI and the MACD, are showing a pick-up in the speed of the price, which suggests there could be more upside in the short-run. The RSI is above 50, but currently somewhat flat. The MACD is balancing near zero, points higher and sits above its trigger line.
Alternatively, if the pair slides below all of its EMAs on the 4-hour chart and breaks below the 1.3235 support zone, this might spook the bulls from the field temporarily. We could then aim for the support area between the 1.3186 and 1.3191 levels, a break of which might set the stage for a further drift south. This is when we could consider for a possible test of the 1.3171 mark, which is Friday’s low.
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