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 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.
Recently, the price zone of 1.2450-1.2500 constituted a strong resistance zone for USD/CAD (backside of the broken uptrend and a previous consolidation zone).
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.
However, the previous weekly closure came above 1.2300 (indicating lack of bearish momentum). Hence, a bullish pullback towards 1.2400 should not be excluded on the short-term.
For risky traders, a daily candlestick closure below the price level of 1.2300 (79.6% Fibo) brings again the bearish scenario to the market. TP levels are projected at 1.2220, 1.2100 and 1.1950.
The material has been provided by InstaForex Company – www.instaforex.com