USDCAD heads for sixth weekly gain ahead of jobs data
USDCAD came to the defense of the bulls on Thursday after clinging to a position near the 23.6% Fibonacci retracement of the 1.2006 rise at 1.2962 at 1.2736.
The price has almost reversed its weekly losses to neutral, refusing to give up its five-week rally, but the 1.2850 zone, which includes the downside resistance trendline from 1.2962, appears to be problematic for the pair.
Nonetheless, momentum indicators are currently keeping the risk on the upside, with the RSI remaining comfortably high in the bullish zone and the MACD clearly hovering above its red signal line. Despite its recent drop, the blue %K stochastic line is looking for a positive cross with the red %D line, also reflecting a persistent buying presence.
Still, traders may not engage in further buying activity unless the pair successfully closes above the restrictive trendline and, more importantly, above nearby key resistance. of 1.2877. If the efforts prove successful, all eyes will be on the crucial high of 1.2950, where price has stopped three times since the end of 2020. A decisive step above this difficult bar could initially stopping around the 38.2% Fibonacci level from March 2020 to May. 2021 downtrend at 1.3023. Otherwise, the pair could head straight for the 1.3150 barrier.
In the event of a strong rejection at 1.2850, the price could fall sharply to take refuge somewhere between the 1.2736 mark and the 20-day simple moving average (SMA). The lack of a bounce here could open the door to the 200-day SMA at 1.2630, while a step below the 1.2600 round level could send the price down sharply to 1.2500 – 1.2470.
Overall, the USDCAD is trading cautiously bullish in the near term. A successful exit from the crucial 1.2950 constraint zone would push the market out of the long-term range and back on an upward trajectory.