Since bulls pushed the price further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level, the market looks quite overbought. That is why, the price failed to hold above 1.2650 – 1.2680 (previous highs) resulting in a formation of a Triple-top pattern.
Successive lower highs were reached 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) for the USD/CAD pair. Bullish support was offered around these levels. A bullish pullback took place shortly after.
The price zone of 1.2450-1.2500 (backside of the broken uptrend) then provided temporary resistance. Shortly after, a daily candlestick closure below 1.2430 enhanced further bearish decline.
However, the previous weekly candlestick closed at 1.2270 when the USD/CAD needed a frank weekly closure below 1.2300 to ensure further bearish decline in the long term. This reflected a lack of bearish momentum.
That is why, an extensive bullish movement is currently being expressed on the chart. An overbought state is being manifested on the charts (breaching of the upper limit of the weekly channel).
Persistence above the level of 1.2400 enhanced a quick bullish movement towards 1.2570 (the previous weekly closure level) and 1.2770 which is being tested today.
The price zone of 1.2740-1.2770 should be defended by bears (the upper limit of the weekly channel as well as 100% Fibonacci Expansion level of the most recent bullish move).
A valid SELL can be offered around the current price levels. S/L should be placed slightly above 1.2850.
The material has been provided by InstaForex Company – www.instaforex.com