- USDCAD surges after breaking a downtrend line
- MACD and RSI detect positive momentum
- A dip below 1.3345 is needed to turn the picture bearish again
USDCAD traded sharply higher today, after it broke above the downtrend line drawn from the high of November 1. The pair is currently respecting a new shorter-term upside support line taken from the low of December 29 and has just poked its nose above the 1.3480 zone, marked by the inside swing low of December 4.
The MACD lies above both its zero and trigger lines, while the RSI stands near 70. Both these short-term oscillators detect positive momentum, but the latter has ticked down, suggesting that there may be a corrective pullback in the works before the next leg north.
If the bulls are willing to jump back into the action soon, then the pair may travel towards the 1.3550 territory, which offered support between December 5 and 13. A break higher could carry more bullish implications, perhaps paving the way towards the highs of July 16 and December 12, at around 1.3620.
On the downside, a dip below 1.3345 may be needed to cancel the positive short-term picture. Such a move would take the pair below all three of the plotted moving averages and below both the aforementioned trendlines. The bears may then get encouraged to dive towards the 1.3265 zone, the break of which could see scope for additional declines towards the 1.3175 area, which offered support on December 27 and 29.
To sum up, the short-term picture of USDCAD looks positive as the pair is trading above a prior downtrend line. The move that could darken the outlook may be a dip below Friday’s low of 1.3345.
