USD/CAD plunged after reached strong resistance levels. The current decline could resume if the Dollar Index drops further. The DXY has developed a Rising Wedge pattern, validating this reversal formation could bring a larger decline in USD/CAD.
Technically, a temporary decline was somehow expected in the short term. It remains to see how USD/CAD will react around the immediate strong support levels. The United States and Canada are to release high-impact data on Thursday and Friday.
Better than expected US figures and poor Canadian data could send the pair higher again. On the other hand, poor US data could punish the greenback which may depreciate versus all its rivals.
USD/CAD Aggressive Drop!
USD/CAD has found resistance at the ascending channel's resistance, upside line. Its last false breakout signaled a corrective phase in the short term. Now is traded at 1.2560 above the weekly pivot point (1.2550).
The second warning line WL2 and the channel's support, the uptrend line, are seen as major dynamic support levels. Personally, I believe that USD/CAD could reach these major support levels.
Outlook!
A fresh long opportunity could appear around the confluence area formed between the WL2 with the uptrend line. A false breakdown with great separation or a major bullish engulfing could bring could represent a bullish signal.
USD/CAD could still increase as long as it stays within the ascending channel's body. Only a valid breakdown from this pattern could announce a larger drop.
