Overview:
Since bulls have pushed the price further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level, the market looks quite overbought.
Successive lower highs were established within the wedge pattern. However, the market experienced a bullish breakout above 1.2550-1.2600 shortly after.
The market failed to hold above 1.2650 - 1.2680 (previous highs) resulting in the formation of a double-top pattern that calls for confirmation (a daily closure below 1.2350).
On the other hand, the support level around 1.2350 (lower limit of the wedge pattern) and 1.2300 (79.6% Fibonacci level) have been providing support for several weeks on the daily and weekly charts.
On a daily basis, as long as the USD/CAD pair keeps trading above 1.2550 (intraday support level), an initial bullish swing towards 1.2800 should be expected (upper limit of the current consolidation range).
In the long term, a projected target for the USD/CAD wedge pattern would be located near the level of 1.3050 (the origin of the last bearish swing initiated on March 2009, 100% Fibonacci level).
On the other hand, a daily closure below 1.2550 brings the USD/CAD pair to 1.2300-1.2350 again (where the lower limit of the wedge pattern as well as 79.6% Fibonacci level is located).
Trading recommendations:
As anticipated, risky traders should wait for bullish breakout above 1.2550 for a valid long entry.
T/P to be placed at the price levels of 1.2740, 1.2800, and finally 1.3040.
The material has been provided by InstaForex Company - www.instaforex.com
