Technical Analysis – USDCAD retreats after bullish spike to 2-month high
USDCAD had a bearish start to Friday after yesterday’s spike to a new two-month high of 1.2876. The pair has also increased its distance above its positively-sloped moving average lines and the Ichimoku cloud, indicating that the recent down move might not hold for long.
Momentum signals are in a confusion. The RSI has reversed lower in the positive region, while the MACD is strengthening its bullish move above its trigger and zero lines.
An upside correction could retest the 1.2814 key mark before attention turns to the 14-month high of 1.2960. Moving higher, the 1.3134 barrier from November 2020 may halt any additional bullish actions.
Should the price extend today's decline, the 20- and 40-day simple moving averages (SMAs) at 1.2720 and 1.2665 respectively may support the market ahead of the 1.2650 handle. Below that, the focus could shift straight to 1.2550, where the uptrend line is converging with the 200-day SMA. If the latter permits more weakness, the next stop could be around 1.2450.
In the short-term picture, the bullish outlook came back into play after the bridge of the 1.2814 top. An extension above that point may restore positive mode. The longer-term traders, however, will probably wait for close above 1.2960 before raising exposure in the market.
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