FxWirePro: USD/CAD on verge of forming handle pattern after testing supports at 1.2672 levels but bears test resistance at 7EMA

Technical watch:

It seems CAD taking a halt from its intermediary bullish rout against USD after testing supports at 1.2672 again like it did in the 1st week of this month.

The pair has bounced back from the yesterday’s lows of 1.2678 levels to the current 1.3029 within a span of just 1 trading session (351 pips or almost 2.76% in a day).

For now, on monthly charts we could see the bulls at around 1.2560 levels bouncing back from last three consecutive months to form a handle pattern to the existing saucer pattern, as the pair is testing resistance at 1.3070 levels, the intraday bulls should be advisable to wait for decisive breach this level.

Although the bulls have shown the significant bounces so far in month rejected below 7EMA, while MACD also shows bearish crossover.

On the contrary, the same monthly charts evidence the “shooting star pattern candle” at peaks of uptrend around 1.3968 levels and shown their bearish effects with substantial volumes formation.

Both leading oscillators signal selling pressures, as RSI (14) evidences a bearish convergence with the dipping price spikes from the overbought zone, currently trending stagnant at around 57 levels, so we believe the pair needs the confirmation for more momentum to continue the existing rallies.

While clear bearish crossover on stochastic near oversold zone from the last couple of months but for now marginally indecisive although shows %k crossover.

However, for a long-run uptrend reversal is still conditional upon breach of above-mentioned resistance, it would be conducive for bulls if it fails we may see bearish business back again.

Trade tips:

On speculative grounds and on a delivery basis, we recommend shorting near month futures potential resumption of bearish business but with a strict stop loss of 1.3160 levels.