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. However, bullish pressure is still being expressed in the market.
The nearest support level to meet the USD/CAD pair is located around 1.2620-1.2650 (upper limit of the confirmed wedge pattern), then 1.2300 (79.6% Fibonacci level that provided significant SUPPORT for successive weeks).
Successive lower highs were established within the wedge-pattern depicted on the daily chart. However, the market price action indicated a 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 be roughly located around 1.3060 (last visited on March 2009).
This week, we should monitor the current weekly candle closure, as price zone around 1.2680-1.2650 is our key-zone. Weekly closure above it enhances the bullish side of the market on the long-term and vice versa.
Risky traders can benefit from the short-term bullish breakout above the wedge-pattern. T/P levels should be set at 1.2880 and 1.2960.
A bearish pullback towards 1.2600-1.2630 will probably offer a valid buy entry for those who missed the initial breakout.
The material has been provided by InstaForex Company – www.instaforex.com