Overview:
A bullish breakout above the previous consolidation zone between 1.2400 and 1.2800 was performed on July 15 (shown on the weekly chart). A long-term bullish target was projected towards the level of 1.3270.
A significant bearish rejection was observed around 1.3450. Since then, another consolidation range was established between 1.2800 and 1.3400.
Few weeks ago, a bearish breakout below the support level of 1.3075 was needed to enable a further bearish decline towards 1.2900. However, an evident bullish rejection was expressed around this level.
A bullish breakout above 1.3400 (the upper limit of the recent consolidation range) was performed on December 7.
Daily fixation above 1.3400 enhanced the bullish side of the market.
A bullish visit towards the next resistance level of 1.4150 (Fibonacci Expansion 100%) was expected to take place. Temporary bullish fixation above 1.4150 is being manifested on the daily chart.
Note that bullish persistence above 1.4150 enhances the bullish side of the market towards 1.4600 where 141.4% Fibonacci expansion is located.
On the other hand, the price zone of 1.3370-1.3400 remains a significant support zone to be watched for a valid buy entries if a bearish correction occurs.
Trading recommendations:
Risky traders can wait for enough bearish rejection to be expressed (bearish engulfing candlestick closure below the price level of 1.4100).
On the other hand, conservative traders should wait for the USD/CAD pair to retrace towards the zone around 1.3400 looking for a low-risk buy entry. S/L should be placed below 1.3300.
The initial T/P levels should be placed at 1.3500 and 1.3600. The long-term bullish target is projected towards 1.4140.
The material has been provided by InstaForex Company - www.instaforex.com