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 closed below 1.2430 enhancing further bearish advancement.
Today, the area around 1.2300 should be defended by USD/CAD bears to resume the ongoing bearish trend.
The current weekly candlestick should close below 1.2300-1.2290 by the end of today's consolidation to enhance further bearish decline.
Price levels around 1.2300 are likely to offer a valid 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 this bearish momentum for a few days.
The material has been provided by InstaForex Company – www.instaforex.com