Overview:
Since bulls have pushed the price further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level, the market looks quite overbought.
The market failed to hold above 1.2650 - 1.2680 (previous highs) resulting in the formation of a double-top pattern that calls for confirmation (a daily closure below 1.2350).
Recently, successive lower highs were established within the depicted consolidation zone, enhancing the bearish side of the market.
Moreover, support levels around 1.2350 and 1.2300 (79.6% Fibonacci level) were finally broken on Wednesday after providing significant support for several weeks on the daily and weekly charts.
A daily closure below 1.2300 clears the way for the USD/CAD pair towards the zone between 1.2050-1.2000 (where the projection target of the recent range breakout is located).
Trading recommendations:
Conservative traders should be waiting for a bullish pullback towards 1.2300-1.2350 for a low-risk sell entry.
S/L should be set as a daily closure above 1.2370 while T/P levels should be placed at 1.2220, 1.2150 and 1.2050 respectively.
