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 strong resistance (backside of the broken uptrend and the previous consolidation zone).
As anticipated, a daily candlestick closure below 1.2430 (previous week) enhanced further bearish decline. Since then, the price zone of 1.2380-1.2400 constitutes solid intraday resistance for the USD/CAD pair.
However, the previous weekly candlestick closed above 1.2300 (lack of bearish momentum). That is why, we need frank weekly closure below 1.2300 to ensure further bearish decline in the long-term.
As anticipated, one daily candlestick closure below the level of 1.2300 offered a profitable sell position.
S/L should now be lowered to entry levels (1.2300) to offset the risk, while the rest of TP levels remain projected at 1.2100 and 1.1950.
On the other hand, the current weekly candle closure should be monitored to determine if the depicted weekly uptrend would get broken-down during the current bearish momentum.
The material has been provided by InstaForex Company – www.instaforex.com