USDCAD has been consolidating since peaking at a 10-month high of 1.3598 on December 28. The pair has recovered by almost 3% after touching a 4-month low in late January and this rally has helped the MACD turn positive on Tuesday for the first time in two months.
The gains have been more prominent over the past three trading days, with prices surging above the Ichimoku cloud, which further underlines the near-term bullish bias. If prices continue to head higher, the previous resistance level of 1.3355 will likely provide some upside barrier before prices reach the key 1.34 level.
However, it should be noted that the stochastics have risen above 80 into overbought territory, signalling a possible technical correction in the days ahead. Should prices reverse lower, the top of the Ichimoku will likely provide immediate support at just above the 1.33 handle, at 1.3308. A drop into the cloud would weaken the bullish bias and bring prices within scope of the 50-day moving average, currently at 1.3210. A breach of the 50-day moving average would turn the bias negative and open the way towards the 200-day moving average at 1.3150.
In the bigger picture, USDCAD has been on a slight upward trending path since May 2016, which can only be sustained if prices successfully challenge December’s high of 1.3598 over the coming weeks.
Origin: XM
