USDCAD gains momentum as July trading kicks off

USDCAD started July trading on a positive note on Friday after halting its latest downside correction around the June support zone of 1.2863, and slightly above its 20 simple moving averages (SMA) and 50 days.

The RSI has avoided a drop below its neutral 50 mark and is currently looking for a bounce, while the Stochastics have also moved north, both approving of the bullish price action.

On the other hand, the MACD is still slightly below its red signal line, preserving some cautionand that seems reasonable as the price is rapidly approaching a short term interim resistance trendline (most visible in the four-hour chart). The 23.6% Fibonacci retracement of the last marked rally from 1.2516 to 1.3077 is also in the vicinity, at 1.2945. Therefore, traders can wait for a successful move above this bar before targeting the difficult resistance area at 1.3026. This is notably where the 200-week SMA and the 38.2% Fibonacci of the 2020 sell-off are placed. Therefore, any violation here can trigger another exciting bull phase.

In the event of a downside reversal, the pair could initially retest the foot at 1.2863, where the 38.2% Fibonacci is located. If the selling pressures prevail, the next destination could be the psychological bar of 1.2800 and the 50% Fibonacci, a break of which could send the price down towards the 61.8% Fibonacci of 1.2695 and the 200 day SMA.

Meanwhile, in the long term picturethe outlook has neutralized following the slide below the 1.2950 area.

In summary, the short-term bias is seen as positive to neutral since the last bullish action still request confirmation with a movement above 1.2945.

Garland K. Long