Technical Analysis – USDCAD extends positive pattern; RSI overbought

USDCAD keeps printing higher highs and higher lows within an ascending channel, reaching fresh 1 ½ -year peaks at 1.3529 on Thursday. While the market looks to be approaching overbought territory according to the RSI, the MACD suggests that the rally is not over yet as the indicator continues to point to increased positive momentum above its red signal line.

On the upside, the upper bound of the channel seen around 1.3538 will attract significant attention as any decisive close above that mark could boost buying interest, with the pair probably scaling even higher to touch the 1.3600 key level. Should the latter fail to restrict the bulls, traders could look for resistance near 1.3792, the top of April 2017.

Alternatively, a move lower may stop around the middle of the channel, at 1.3425, while all eyes will be on the lower trendline at 1.3300 which if violated, could confirm the continuation of the negative mood. Before that, however, the price may retest the 20-day (simple) moving average (MA) currently at 1.3455 as it did in previous sessions. Below the channel, the door could open for the 1.3170 barrier.

Looking at the bigger picture, the break above 1.3385, the high on June 27, turned the outlook to positive, and with the 50-day MA picking up speed above the 200-day MA, it seems that the bullish phase is likely to continue.

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