USDCAD continues to rise above the 20- and 40-simple moving averages (SMAs) as well as above the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, around 1.3072, remaining below the short-term descending trend line for the moment.
According to the stochastic oscillator, positive momentum could push for further gains in the daily chart as the indicator is picking up steam and is ready to create a bullish crossover within the %K and %D lines. The RSI is also advancing, above the threshold of 50, indicating a possible upward penetration of the falling trend line.
In the positive scenario, where the price continues to expand above the 1.3100 handle, a new top could be formed around the 1.3230 resistance barrier, shifting the near-term bearish structure back to a bullish one. If the market manages to overcome that area, traders could look for resistance at the 1.3290, before steeper bullish actions take the price up to the one-year high of 1.3385.
A reversal to the downside and a drop below the moving averages could open the door for the 1.2910 support level, slightly above the 38.2% Fibonacci mark of 1.2880. Further below, the 1.2780 level could also provide support as the pair was unable to fall significantly under that line in the last three weeks and any violation at this point could potentially trigger a further sell-off in the market towards the 50.0% Fibonacci of 1.2730.
In the short-term, the negative picture has somewhat softened after the touch on the downtrend line, but traders might still want to see the market closing decisively above this line before confirming that the recent bounce is sustainable.
Regarding the bigger picture the bullish outlook remains intact as USDCAD stands above the ascending trend line, which has been holding since September 2017.
