Several months ago, when bulls pushed the price above the 79.6% Fibonacci level, the market looked quite overbought. That is why, the price failed to hold above 1.2650 – 1.2680 (previous highs), resulting in lower highs (within the depicted consolidation zone) enhancing the bearish side of the market.
Daily fixation below 1.2300 opened the way towards the levels of 1.2000 and 1.1940 (the depicted weekly uptrend).
Bullish support was found around these levels. Higher lows were reached. Bullish pressure was applied to the resistance levels of 1.2450 and 1.2500 (previous tops).
A bullish breakout above the zone of 1.2770-1.2800 has been executed.
The long-term bullish target was projected towards the level of 1.3270 (100% Fibonacci Expansion). However, bulls have pushed beyond this level since two weeks ago.
However, a bearish corrective movement towards the level of 1.2750 (breakout level) was expected since USD/CAD bears managed to defend the resistance zone of 1.3400-1.3450 (Fibonacci Expansion 141% level) and 1.3280 (Fibonacci Expansion 100%).
Moreover, bearish persistence below 1.3270 (Fibonacci Expansion 100%) is needed to maintain enough bearish pressure to expose the next support level around 1.3100, 1.2910, and 1.2750 where long-term buy entries can be considered.
A counter-trend sell entry was suggested around the levels of 1.3400-1.3450 (Fibonacci Expansion 141% levels). S/L should be lowered to 1.3200 to secure some profits. T/P levels were placed at 1.3300,1.3220 (both were reached) and 1.3050 (yet to come).
On the other hand, conservative traders should wait for further bearish pullback towards the recent breakout zone (1.2800-1.2750) for a valid buy entry as the breakout level constitutes a strong support level.
S/L should be located below the level of 1.2700. T/P levels should be located at 1.2850 and 1.2900.
The material has been provided by InstaForex Company – www.instaforex.com