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 1.2450-1.2500 constituted a strong resistance zone for USD/CAD.
As anticipated, a daily candlestick closure below 1.2430 (last Monday) enhanced further bearish decline. That is why, the price zone of 1.2380-1.2400 now constitutes a solid intraday resistance for the USD/CAD pair.
The weekly candlestick closed above 1.2300 by the end of Friday (signs of weak bearish momentum). Hence, a bullish pullback towards 1.2400 should not be excluded this week.
On the other hand, a daily candlestick closure below the level of 1.2300 brings again the bearish scenario to the market. TP levels are roughly located at 1.2220, 1.2100 and 1.1950.
The material has been provided by InstaForex Company – www.instaforex.com