Few months ago, when bulls pushed the price further above 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 lower highs (within the depicted consolidation zone) enhancing the bearish side of the market.
Daily fixation below 1.2300 opened the way towards the levels of 1.2000 and 1.1940 (the depicted weekly uptrend).
Bullish support was found around these levels. Higher lows were reached. Bullish pressure was applied to the resistance levels of 1.2450 and 1.2500 (previous tops).
On the other hand, the previous weekly candlestick was rather bullish. That is why an extensive bullish movement is seen on the chart.
A bullish breakout above the zone of 1.2770-1.2800 has been executed.
The long-term bullish target was projected towards the level of 1.3270 (100% Fibonacci Expansion) where bearish pressure should be expected. Bulls are revisiting this level today.
Bearish corrective movement towards the level of 1.2750 (Breakout Level) should be expected as long as USD/CAD bears keep defending the Fibonacci Expansion zone around 1.3270 – 1.3300.
Moreover, bearish persistence below 1.3100 (lower limit of the depicted Flag pattern) is needed to expose the next support level around 1.2910 and then 1.2800 where long-term buy entries can be considered.
A counter-trend sell entry was previously suggested around the level of 1.3330 (Fibonacci Expansion 100%). S/L should be placed above the level of 1.3400.
Conservative traders should wait for a bearish pullback towards the recent breakout zone (1.2800-1.2750) for a valid buy entry as the breakout level constitutes the recent strong support.
Stop Loss should be located below the level of 1.2700. T/P levels should be located at 1.2850 and 1.2900 and T/P levels to be placed at 1.3200 and 1.3050.
The material has been provided by InstaForex Company – www.instaforex.com