- USD / CAD gains strong continuation traction for the second day in a row on Monday.
- Momentum stops near the 1.2800 level, where the 200-period SMA is located on the 4-hour chart.
- The bulls could wait for a sustained move above the mentioned barrier before opening new positions.
The USD / CAD pair has extended last week’s good bounce from multi-year lows and gained strong continuation traction for the second day in a row on Monday.
However, the bulls have struggled to capitalize on the momentum and have faced rejection near the confluence resistance at 1.2800. The aforementioned barrier is where the 200-period SMA converges on the 4-hour chart and a downtrend line extending from mid-November.
Meanwhile, the technical indicators on the 1-hour chart have been gaining positive traction, but have yet to confirm the bullish bias on the daily charts. This, in turn, warrants some caution before positioning for any further bullish movement.
Therefore, it will be prudent to wait for some subsequent purchases above the round 1.2800 level to confirm that the USD / CAD has bottomed out in the near term. This, in turn, will be seen as a new trigger for bullish investors.
Any further positive movement is likely to face resistance near the monthly highs, around the 1.2835 region. A sustained force above that region will be seen as a new trigger for the bulls and could push the USD / CAD towards the 1.2900 level.
Momentum could further extend towards intermediate resistance near the 1.2955 region, above which the USD / CAD appears poised to target the key psychological level of 1.3000.
On the other hand, immediate support is at the horizontal zone of 1.2740-35. A convincing break below could make the USD / CAD pair vulnerable to break below the 1.2700 level and extend the slide towards the test of the next relevant support near the 1.2670-65 region.
USDC / AD 4-hour chart
USD / CAD technical levels
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