USDCAD skyrocketed by 2.0% to a 20-month high of 1.3222 on Thursday, and although the pair could not cling to this top, it managed at least to close clearly above the 1.3026–1.3077 block, which had been strongly rejecting the bulls since mid-May.
Strikingly, the market is now finally ready to win a weekly close above the 200-weekly simple moving average (SMA) for the first time since October 2020, signaling further progress ahead.
In the daily chart, the technical picture is looking brighter. The price is now trading comfortably above its upward-sloping SMAs, while both the RSI and the MACD have further grown in the bullish area, with the former ticking above its previous highs and the latter speeding up above its red signal line. Notably, the RSI and the Stochastics are halfway below their overbought levels, suggesting that the bullish cycle has more fuel in the tank.
Should buyers overtake the 1.3120 territory, where the price almost finished yesterday’s session, the door will open again for the 1.3222–1.3230 resistance. If that bar cracks this time, the rally may stretch towards the 1.3340–1.3380 restrictive zone taken from the second half of 2020. Notably, this area also encapsulates the 50% Fibonacci of the 2020–2021 downtrend (1.4667–1.2006).
In the event the price halts its bull run around 1.3120 and reverses lower instead, it would be interesting to see whether the broken resistance of 1.3026–1.3077 can change its role to defend the ascend in the market. Within a short distance, the ascending trendline drawn from June’s low of 1.2516 could be the last opportunity for a rebound before the outlook weakens back to neutral and the spotlight turns again to the 20-day SMA, currently at 1.2956. Even lower, the 50-day SMA at 1.2859 could be the next destination.
All in all, USDCAD is currently exhibiting a bullish appetite for the coming sessions. Another successful move above 1.3120 is expected to release fresh buying. Otherwise, a negative reversal below 1.3026 could inject some caution back into the market.
