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 price 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 bullish rejection. However, bearish breakout should not be excluded this week as signs of successive bearish pressure have already originated on the daily chart (successive lower highs were expressed around the price levels of 1.2290 and 1.2150).
On the other hand, the price zone of 1.2330-1.2350 remains significant intraday resistance for further retesting. This zone is likely to offer a low-risk sell entry while re-testing.
Breakdown of the recent low at 1.1940 invalidates the bullish scenario.
However, as previously suggested, risky traders could have taken a counter-trend buy entry anywhere around 1.1950. S/L should be set as daily closure below 1.1930. T/P is projected at 1.2100, 1.2270, and 1.2320.
On the other hand, conservative traders should wait for a bullish pullback towards the levels 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