USDCAD remains above the simple moving averages in the daily timeframe over the last six days suggesting that the pair is ready for a bullish extension. After the aggressive sell-off on Wednesday, the price pared some of the losses and jumped above the 50.0% Fibonacci retracement level of the downleg from 1.3800 to 1.2060, around 1.2925, once again.
Looking at the short-term chart, based on technical indicators, momentum is too weak to provide a sustained move higher. The MACD oscillator is flattening near its trigger line in the positive area, while the RSI indicator is standing above the 50 threshold but is flattening.
In case of further upside movement, the 1.3050 resistance level could act as a significant barrier before being able to re-challenge the 1.3130 obstacle, which overlaps with the 61.8% Fibonacci mark. A climb above this region would send prices above the upward sloping channel towards the 1.3350 hurdle, suggesting a strong bullish structure.
On the flip side, the next support should come from the 20- and 40-simple moving averages (SMAs) at 1.2875 and 1.2806 respectively. A dip below this region would drive the price toward the next barrier of the 38.2% Fibonacci, around 1.2725. Further losses could send the pair until the next low of 1.2530, taken from the trough on April 17 and significantly weaken the bullish medium-term picture.
Overall, USDCAD has been developing within a rising sloping channel since September 2017, failing several times to exit from this range.
