Overview:
The market looks overbought since bulls have pushed further above the upper limit of both depicted bullish channels as well as the 79.6% Fibonacci level. That is why the sideways movement was anticipated.
The nearest SUPPORT levels to meet the USD/CAD pair is located around 1.2620-1.2650 (upper limit of the confirmed wedge pattern), then 1.2300 (79.6% Fibonacci level) that already provided significant SUPPORT for successive weeks.
Successive lower highs were established within the wedge-pattern depicted on the DAILY chart. However, the market price action indicated an ongoing bullish breakout above 1.2600-1.2660.
Bullish persistence above 1.2650 - 1.2680 (recent highs) enhances further bullish advancement towards 1.2900 and 1.2960, as it confirms the continuation pattern.
Projection target for the wedge pattern would be roughly located around 1.3060 (last visited on March 2009).
Consider the other scenario if WEEKLY closure comes below the price zone of 1.2680-1.2650 (key-zone). If so, this would expose the next DAILY SUPPORT around 1.2350 and 1.2300 where the 79.6% Fibonacci level is located.
Trading recommendations:
Risky traders can benefit from the short-term bullish breakout above the wedge-pattern. T/P levels should be set at 1.2880 and 1.2960.
A bearish pullback towards 1.2600 will probably offer a valid BUY entry for those who missed the initial breakout.
The material has been provided by InstaForex Company - www.instaforex.com
