Since bulls have pushed further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level. The market looks quite overbought.
However, bullish pressure is still being expressed on the market (the previous weekly closure came above 1.2750).
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 on the DAILY chart).
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 (previous highs) enhances further bullish advancement towards 1.2900 and 1.2960, as it confirmed the wedge pattern as a bullish continuation one.
Projection target for the wedge pattern would be roughly located around 1.3060 (the origin of the last bearish swing initiated on March 2009).
This week, the current weekly candle closure should be monitored, as the price zone of 1.2680-1.2650 is our key-zone. Weekly closure above it enhances the bullish side of the market in 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 with SL placed slightly below 1.2570.
The material has been provided by InstaForex Company – www.instaforex.com