- USD / CAD gained traction for the second day in a row and rebounded further from multi-year lows.
- Momentum stalled near a downtrend line / 50% Fibonacci confluence level near 1.2685.
- The mixed technical indicators on the hourly / daily charts warrant caution from aggressive bull traders.
The pair USD / CAD it gained traction for the second consecutive session on Friday and built on the previous day’s solid rebound from three-year lows. Momentum pushed the pair to fresh weekly highs, although it stalled near the confluence hurdle at 1.2685.
The mentioned region marks 50% of the Fibonacci level of 1.2882-1.2468 and the monthly descending trend line. This should now act as a key point for short-term traders and help determine the next leg of a directional move in the USD / CAD pair.
Meanwhile, bullish technical indicators on the hourly charts support the prospects for additional gains. That being said, the oscillators on the daily chart, although they have been recovering from bearish territory, have yet to confirm a short-term positive bias.
This makes it prudent to wait for sustained strength beyond the aforementioned confluence barrier before confirming that the USD / CAD pair could have bottomed out in the near term. This, in turn, will lay the groundwork for a new appreciation move.
The USD / CAD pair could break above the 1.2700 level and aim to test the 61.8% Fibonacci level around the 1.2725-30 region. Momentum could extend further towards the intermediate resistance at 1.2775 en route to the 1.2800 level.
On the other hand, the 1.2600 level now seems to protect the immediate drop. This is followed by support near the 23.6% Fibonacci level, around the 1.2570-65 region, which if decisively broken will negate any positive outlook for the USD / CAD pair.
4 hour chart
Technical Levels
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