Since bulls pushed the price further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level, the market looked quite overbought. That is why the market failed to hold above 1.2650 – 1.2680 (previous highs) resulting in the formation of a Triple-top pattern.
Successive lower highs were established 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 cleared the way for the USD/CAD pair towards the levels of 1.2000 and 1.1940 (projection target of the recent range breakout and the depicted weekly uptrend).
That is why we expected these price levels to provide significant signs of bullish price action. However, bearish breakout shouldn't be excluded this week as bearish pressure has originated this week (successive lower highs were expressed around the price zone of 1.2100-1.2150).
On the other hand, the price zone of 1.2330-1.2350 remains a significant intraday resistance zone for further retesting. This zone is likely to offer a low-risk sell entry while retesting.
Risky traders could have taken a buy entry anywhere around the price level of 1.1950. T/P is projected at 1.2100, 1.2270 and 1.2320.
Note that breakdown of the recent low at 1.1940 invalidates this bullish scenario.
On the other hand, conservative traders should wait for a bullish pullback towards the price zone of 1.2300-1.2340 for a low-risk sell entry. T/P levels should be placed at 1.2220, 1.2100, and 1.1950 while S/L should be placed above 1.2250.
The material has been provided by InstaForex Company – www.instaforex.com