On December 7, a bullish breakout above 1.3450 (upper limit of the recent consolidation range) enhanced the bullish side of the market. Hence a bullish visit to the resistance at 1.4120 (Fibonacci Expansion 100%) occurred.
Bullish persistence above 1.4150 enhanced the bullish side of the market towards 1.4650 (141.4% Fibonacci expansion) where an evident bearish rejection was expected (bearish engulfing weekly candlestick).
The 1.4120 level (Fibonacci Expansion 100%) stood as a significant resistance level where a significant bearish rejection was applied.
Although the area of 1.3050-1.3250 was expected to offer bullish support for the USD/CAD pair, the same price zone was broken as depicted on the daily chart.
Shortly after, the 1.3300 level stood as a significant resistance as it corresponds to the 50% Fibonacci level and the backside of the broken weekly uptrend where a valid sell entry was suggested on March 24.
Since then, the USD/CAD pair has been trapped within the consolidation range between 1.3300 and 1.3300 until a bearish breakout took place on April 11.
Shortly after the quick bearish decline took place below 1.3000, signs of bullish recovery were expressed around 1.2460.
The current bullish pullback towards 1.3000 (61.8% Fibonacci level) was expected to offer a valid signal to sell the USD/CAD pair. However, lack of significant bearish rejection was manifested during last week's consolidations.
Bullish persistence above 1.3000 (61.8% Fibonacci level) opens the way towards 1.3300 (50% Fibonacci level) where price action should be watched for a better SELL position.
On the other hand, bearish persistence below 1.3000-1.2970 (61.8% Fibonacci level) will be needed to maintain enough bearish momentum in the market.
The material has been provided by InstaForex Company - www.instaforex.com