The market looks overbought since bulls have pushed further above the upper limit of both depicted bullish channels as well as the 79.6% Fibonacci level. That is why the sideways movement was anticipated.
The nearest SUPPORT level to meet the USD/CAD pair is located around 1.2300 (79.6% Fibonacci level) that provided significant bullish SUPPORT for few successive weeks.
Successive lower highs were established within the wedge-pattern depicted on the DAILY chart. However, the current market price action indicates an ongoing bullish breakout above 1.2600-1.2660.
Bullish persistence above 1.2650 – 1.2680 (recent highs) enhances further bullish advancement towards 1.2900 and 1.2960, as it confirms the continuation pattern.
Projection target for the wedge pattern would roughly be located around 1.3060 (last visited on March 2009).
Consider the other scenario if WEEKLY closure comes below the price zone of 1.2680-1.2650 (key-zone). If so, this would expose the next DAILY SUPPORT around 1.2350 and 1.2300 where 79.6% Fibonacci level is located.
Risky traders can benefit from the short-term bullish breakout above the wedge-pattern. BUY trigger is the DAILY closure above 1.2650. T/P levels should be set at 1.2880 and 1.2960.
The material has been provided by InstaForex Company – www.instaforex.com