USD/CAD has increased as high as 1.3328 level, but it has failed to reach the 1.3344 major static resistance. The price plunged in the last hours as it seems too overbought to be able to resume the upside movement.
The Canadian dollar could take the lead and could drive the pair down as the USDX seems overbought as well. MACD and Stochastic are indicating a bearish divergence on the H4 chart, right now we still need only a confirmation that the price will start a corrective phase.
Technically, a drop is somehow expected after the impressive rally, USD/CAD has jumped above the median line (ML) of the major ascending pitchfork, but now is trading at 1.3275, right below it. USD/CAD could drop towards the 23.6% level in the near term if the price stabilizes below the median line (ML).
A broader correction will be confirmed only after a breakdown below the 23.6% retracement level, the next downside target is seen at the sliding parallel line (SL) of the ascending pitchfork. The potential drop will be confirmed after a lower low, breakdown below 1.3262 level.
- Trading Tips
A retest and a rejection from the median line (ML) will signal a potential drop towards the 23.6% in the first instance, you should consider placing your Stop Loss above 1.3313 level. The hidden divergence from the Daily chart could send the price down to 38.2% retracement level.
The potential corrective phase could be invalidated only if the price registers a false breakdown below the median line.
