A temporary top is formed at 1.2585 in USD/CAD and the intraday bias has turned neutral first. With the 1.2585 resistance intact, further decline is expected. A decisive break of 1.2538 will target at 1.2462 next. However, a break of 1.2585 will dampen our bearish view and turn bias back to the upside for 1.2599 instead.
Looking at the bigger picture, current development argues that USD/CAD has defended 1.2590. And with 1.2590 intact, we’d favor the case that a fall from this level must be seen as a correction. A break of 1.2544 will further affirm this bearish case. That is, a larger decline from 1.2544 is not completed. However, on the other hand, a firm break of 1.2590 will indicate that a rise from 1.2517 is at least a medium term up trend and should target at 1.2598 and above.
The recent run higher on the greenback has been incredible. A huge accelerating bull run has seen the market burst through the key until now. The market has been limited by the resistance band 1.2590 on numerous occasions in the past candles but the weakness of the dollar has driven a breakout. Chasing the Canadian dollar here could be highly profitable. Staying with the bull-run may be a risk in the very near term, however, if profit is taking hits, it could be a sharp reversal. Watch for exhaustion signals, though the pair seems to be already exhausted. On the oscillator, it is also notable that the entirety of today’s session took place outside the 80.0 standard deviations. The bulls were looking tired before the sharp gains, but again the move looks stretched and a close back inside the 80 levels would now be a corrective signal. A move back below 80 on the four-hour would now be a corrective signal that a closing level back inside the levels. The four-hourly chart support turned resistance around the breakout at 1.2544.
The USD/CAD pair returns to test the bearish channel’s resistance after leaning on the intraday bullish support line that appears on the four-hour chart. This is accompanied by stochastic reach to the overbought areas, waiting to motivate the price to rebound bearishly to break the 1.2544 level and activate the negative effect of the bearish pattern formed by the mentioned intraday channel, followed by pushing the price to continue the main bearish trend.
Therefore, we believe that the chances are valid to trade negatively in the upcoming period conditioned by the price stability below 1.2544, reminding you that our main targets begin at 1.2517 and extend to 1.2471.
Expected trading range for today is between the 1.2544 resistance and the 1.2471 support.
Expected trend for today: Bearish
For more detailed analysis from the author, please visit NoaFX.
This article was originally posted on FX Empire
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