When bulls pushed the price further above 79.6% Fibonacci level, the market looked quite overbought. That is why, the price failed to hold above 1.2650 – 1.2680 (previous highs), resulting in a formation of successive lower highs (within the depicted consolidation zone) enhancing the bearish side of the market.
Daily fixation below 1.2300 opened a way towards the levels of 1.2000 and 1.1940 (the depicted weekly uptrend).
Bullish support was found around these levels. Successive higher lows were reached. Bullish pressure was applied against the resistance levels of 1.2450 and 1.2500 (previous tops).
On the other hand, the previous weekly candlestick was quite bullish. That is why, an extensive bullish movement is seen on the chart.
A bullish break out above the zone of 1.2770-1.2800 has been executed.
The long-term bullish projection target remains projected at the level of 1.3270 (100% Fibonacci Expansion) where bearish pressure should be applied.
Recently, signs of lack of bullish momentum were generated on the chart (Head and Shoulders reversal pattern).
A bearish corrective movement towards the levels of 1.2750 (Breakout Level) should be expected as long as USD/CAD bears keep defending the weekly high around the price level of 1.3180.
On the other hand, bearish persistence below 1.3050 is needed to expose the next support level around 1.2910 and then 1.2800 where long-term BUY entries should be considered.
Conservative traders should wait for a bearish pullback towards the recent breakout zone (1.2800-1.2750) for a valid buy entry as the breakout level constitutes a strong support.
Stop Loss should be located below the level of 1.2700. T/P levels should be located at 1.2850 and 1.2900.
The material has been provided by InstaForex Company – www.instaforex.com