The pair forms inverted head and shoulder pattern with the head at 1.2768, 1st shoulder at 1.2861 and 2nd shoulder at 1.2822 levels.
From last four consecutive days, the dollar seems to have taken a halt from its intermediary bull run as it breaks out above the neckline of this inverted H&S pattern (see daily plotting). But at this juncture prices drifting in sideways as both bulls and bears interests are intensified.
Watch out for extension of bull swings on the break-out above resistances of 1.3140 (neckline).
Upswings in USDCAD spiked above DMAs, currently testing 7DMA as strong supports.
Both leading oscillators signal still buying interests, as RSI (14) evidences a positive convergence with the rising prices after testing support at 46 levels multiple times, currently trending restrained at 64.5 levels again, but there has been no selling sentiments.
While stochastic has been quite decisive to signal momentum in this buying sentiment but it has neither signalled shorts on the contrary.
We could see more alarms for bears as the pair bullish momentum is clear for the day.
On the broader perspective, for now, bulls resuming rallies and are on the verge of forming handle pattern to the previous saucer pattern (see monthly charts). Consistently testing of supports 21EMA levels, but current upswings have restrained at resistance of 1.3070 levels
If these rallies continue to persist for few weeks then we could foresee handle pattern in coming months. Hence, one can initiate longs amid this bullish environment.
Trade tips:
Well, on speculative grounds, we recommend buying one touch call options which are highly leveraged products on every dip. Since 1W implied volatility is on the higher side (a tad below 10.45%) in a slightly bullish environment in the short term, we recommend this long vega strategy.
