USD/CAD moved in a roller coaster manner yesterday, after the BoC statement and interest rate decision came out. Initially it fell below the mid-term uptrend, drawn from the low of 17th of April, but the drop was short-lived and the pair quickly reversed back up again. USD/CAD broke the key area of resistance at around 1.3160 and made its way towards the 1.3220 area, marked near the peak of the 2nd of July. Certainly, this move makes the near-term outlook somewhat positive.
For now, we will aim for the highs again, but first, we could probably see a bit of correction to the downside. A good potential area of support could be the 1.3175, from which USD/CAD could bounce and target yesterday’s high at around 1.3220, a break of which could open the door towards the 1.3265 zone, which acted as both support and resistance in the end of June. Further acceleration in the rate could lead to a test of the 1.3340 mark, or even the key area of resistance seen across June at 1.3385.
We could also see a scenario where USD/CAD could move all the way back to the aforementioned uptrend line, test it and then bounce back to the upside towards the previously mentioned levels.
The RSI is currently giving us mixed signals. It sits above 50, which is a positive sign, but at the same time is pointing down. Nevertheless, the indicator remains on an uptrend. Unlike the RSI, the MACD shows a solid momentum move higher, as it is above zero, its trigger line, and is pointing up.
On the downside, we would need to see a break and a close below the aforementioned trendline, in order to start examining the possibility of a trend reversal. We could then see a test of the 1.3060 area that recently acted as good support, which if broken this time, could confirm the reversal and open the path towards the 1.2960 area for a quick test.
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