USDCAD has been trading in an ascending movement over the last one-and-a-half months, but in case of a penetration of the trend line it could move lower in the near term. Also, when looking at the bigger picture the pair has a clear upside trend after its rebound on the 1.2060 support level.
Momentum indicators in the daily timeframe, are too weak to provide a sustained move higher as the RSI is flattening above the neutral threshold of 50 and the MACD dropped marginally below the trigger line. The 20- and 40-simple moving averages (SMAs) could act as strong support levels for traders, as the price holds above them.
In the event of more negative pressures and a slip below the 20-day simple moving average (SMA) the pair could challenge the 1.3125 support, taken from the latest lows. A significant slip below this region, could lead to a test the 40-SMA level near 1.3090, before heading towards the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, around 1.3070.
However, a rebound could drive the market until the 1.3315 resistance and a jump above this region, could take on the one-year high of 1.3385.
Turning to the long-term view, the market seems to be in a bullish mode given that USDCAD still trades above the 20- and 40-day SMAs and well above the long-term ascending trend line, which has been holding since September 2014.
To sum up, the pair is expected to post more gains in the short- and long-term outlooks.
Origin: XM
