USDCAD has successfully manoeuvred over the Ichimoku cloud and above the 100-period simple moving average (SMA), which was last breached on July 20. The pair is currently piercing the medium-term restrictive line, drawn from March 19. The rising red Tenkan-sen line has overlapped with the blue Kijun-sen line, increasing positive momentum and assisting the pair in tackling the trend line.
Additionally, the short-term oscillators also demonstrate bullish momentum. The MACD, in the positive section, is growing above its red trigger line, while the RSI is advancing in bullish territory. Moreover, presently in the overbought region, the upward sloping stochastic lines sponsor extra gains in price. However, some caution is warranted as the simple moving averages (SMAs) continue to convey a dictating bearish tone.
If the pair manages to close above the trend line and the 1.3165 nearby high, the next resistance may stem from the 1.3204 barrier ahead of the 200-period SMA residing at the 1.3239 border. Triumphing above the 200-period SMA, the price may shoot for the 1.3270 obstacle before targeting the 1.3346 peak.
If sellers retake control, they would need to initially steer the price back below the descending line and the 100-period SMA at 1.3140. Next, the upper band of the cloud at 1.3117 – where the red Tenkan-sen line lies – may attempt to obstruct the pair from resuming a negative path. Should it sink into the cloud, the 50-period SMA at 1.3083 could deliver support ahead of the 1.3036 trough. More declines may challenge the 7-month low of 1.2994 prior to the 1.2975 barrier from January 8, and the 1.2951 low, achieved on 31 December 2019. Even steeper losses could encounter the 1.2915 support from October 2018 and the 1.2886 mark.
Summarizing, to maintain recent confidence, the price would need to remain above the 1.3165 barrier, while a break above the 200-period SMA at 1.3239 would reinforce this optimism. Otherwise, the bearish bias may resume control.
Origin: XM