USDCAD gained significant buying traction early on Friday – the largest daily increase since September 7 –, with the price quickly recouping earlier losses to peak above Tuesday’s high of 1.2743.
The positive slope in the RSI and the growing MACD are endorsing the current bullish momentum in the price, though with the former nearing its 70 overbought level and the key ascending line capping the market action, the bears could be around the corner.
A decisive close above the ascending line and the 1.2750 level would reduce negative risks, likely producing another bullish extension towards the key 1.2824 resistance. Beyond that, traders will target the nine-month high of 1.2947, a break of which would re-activate the 2021 uptrend, shifting the medium-term outlook from neutral to positive. Still, any steps higher could be limited if a new barrier pops up near the 1.3000 psychological mark.
Otherwise, if sellers take the lead, the pair may pull back to test the nearby support of 1.2640. Falling lower, the 38.2% Fibonacci retracement of the 1.2006 – 1.2947 upleg may attempt to add some footing around 1.2588, while not far below, the 20-day simple moving average (SMA) could block the way towards the 50% Fibonacci at 1.2477 and the 200-day SMA.
In brief, USDCAD is strengthening its bullish trend in the short-term picture, but the rapid bounce warrants some caution as the price is challenging the crucial boundary set around 1.2750.
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