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 around 1.2400 has constituted solid intraday resistance for the USD/CAD pair.
However, the previous weekly candlestick closed at 1.2270 (reflecting market indecision). The USD/CAD pair needs a frank weekly closure below 1.2300 to ensure further bearish decline in the long term.
If the current weekly candlestick closes below 1.2200, the weekly uptrend is likely to get breached soon.
On the other hand, persistence above the price level of 1.2220 enhanced a bullish pullback towards 1.2330, as anticipated yesterday.
Hence, the current price zone (1.2300-1.2330) should be watched for significant price action. A valid SELL entry may be taken if enough bearish rejection is expressed.
The material has been provided by InstaForex Company – www.instaforex.com