USDCAD turned neutral after its downfall from the 1-year high of 1.3385, finding support at the uptrend line it started building in mid- April. In the short-term, consolidation is likely to be continued as the RSI has flattened slightly above its neutral threshold of 50 and the MACD has paused its downward move near zero, while the 20-day moving average has lost steam as well.
On the upside, the area between 1.3180 and 1.3203, outlined by the 23.6% Fibonacci retracement of the April’s 17th to June’s 27th upleg and the 20-day MA, could provide immediate resistance as it did the past two weeks and a year ago as well. Beyond this area, resistance could then run towards 1.3265 which has acted as support in June before the 1.3385 top comes under the radar. Yet, the pair needs to successfully break this peak to revive bullish sentiment again.
Alternatively, should the price head south, it would be interesting to see whether the uptrend line can stop downside corrections once more, probably around 1.3100. If this is not the case, the market could drop below the previous low of 1.3056 which coincides with the 38.2% Fibonacci in order to meet the 50-day MA at 1.3030. Even lower, the area between the 50% Fibonacci of 1.2953 and the resistance-turned-support level of 1.2925 could be another target given that the zone has been frequently tested in the past.
Regarding the medium-term picture, the market is expected to remain bullish as long as the upward pattern off 1.2526 remains in place. However, the bullish phase could fade out if the price falls below 1.3100.
