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 recent bullish pullback towards 1.3000 (61.8% Fibonacci level) was expected to offer a valid signal to sell the USD/CAD pair. However, a lack of significant bearish rejection was manifested during recent consolidations.
Recently on May 18, temporary bullish fixation above 1.3000 (61.8% Fibonacci level) opened the way towards the 1.3180 level where significant bearish pressure was originated.
The current bearish persistence below 1.3000-1.2970 (61.8% Fibonacci level) should be maintained to enhance more bearish momentum in the market. Initial T/P levels should be located at 1.2770, 1.2650 then 1.2450.
On the other hand, the price zone of 1.2400-1.2500 constitutes a significant support zone to be watched for possible BUY entries if enough bearish pressure is applied below 1.2650.
The material has been provided by InstaForex Company - www.instaforex.com