USDCAD looks to be overbought according to the technical indicators after the bullish rollercoaster occurred in the preceding days towards a fresh four-year high of 1.3960.
The stochastic oscillator is flattening above the 80 level and is ready to post a bearish cross within the %K and %D lines. Also, the RSI is reversing to the downside after the extension above the 70 level. However, the short-term moving averages are still following the strong upside structure in the daily timeframe.
Should prices reverse lower, support could come at 1.3790, taken from the high on April 2017. Below that, the 23.6% Fibonacci retracement level of the up leg from 1.2950 to 1.3960 at 1.3720 is another major support. A drop below this area would take the pair closer to the 1.3665 support.
To the upside, there is immediate resistance just below the four-year high, which is the 261.8% Fibonacci extension level of the downward wave from 1.3326 to 1.2950 at 1.3935. Even higher, strong resistance is coming from the 1.4005 region, identified by the peaks on January 2016.
In the long-term, the outlook remains positive since prices hold above all the moving average lines and the bullish cross between the 50- and the 200-day SMA stays in place.
Origin: XM
