Technical Analysis – USDCAD skyrockets to new 4½-month high
- USDCAD still holds above steep uptrend line and 20-day SMA
- But momentum oscillators look overstretched
USDCAD has posting a stunning rally, moving towards a new four-and-half-year high of 1.4243. After the pullback from the 1.3440 support level, the pair remains above the 20-day simple moving average (SMA), which is acting as a support barrier; however, the technical oscillators look to be overstretched. The RSI is moving horizontally near 70 level, while the stochastic is flattening in the overbought region. Both suggest that a bearish correction may be near.
In case of a sell-off, the pair may test the immediate support at 1.4195 ahead of the 1.4100 round number. Even lower, the 20-day SMA at 1.4060 is waiting for another test before a bullish move starts again.
Alternatively, a continuation of the buying interest may send the market until the April 2020 peak at 1.4265 before rallying towards the peak of March 2020 at 1.4680.
All in all, the bullish structure in the short- and long-term timeframes remains intact and only a slip beneath the 200-day SMA at 1.3720 may switch the outlook to bearish.
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