Since bulls pushed the price further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level, the market has looked 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.
Support levels around 1.2350 and 1.2300 (79.6% Fibonacci level) were broken after providing significant support for several weeks on the daily and weekly charts.
Daily fixation below 1.2300 opened the USD/CAD pair a way towards the levels of 1.2000 and 1.1940 (the depicted weekly uptrend).
That is why significant bullish support was offered around these levels. Since then, a bullish pullback has been taking place.
On the other hand, the price zone of 1.2430-1.2500 constitutes a significant resistance zone for USD/CAD.
As anticipated, a bearish candle closure below 1.2430 enhanced further bearish advancement.
Today, the area around 1.2300 should be defended by USD/CAD bears to resume the ongoing bearish trend.
This offers a low-risk sell position with good long-term potential targets especially if enough bearish momentum is applied against the depicted weekly uptrend.
T/P levels should be placed at 1.2220, 1.2100, and 1.1950 while S/L should be lowered to 1.2350 to secure profits.
On the other hand, daily fixation above the level of 1.2300 hinders the current bearish momentum.
The material has been provided by InstaForex Company – www.instaforex.com