Bullish Week: USD/CAD is bullish this week after falling from 1.11 to 1.0886. At the beginning of the week, we saw a break above a falling trendline from the previous week, and price climbed above the 200-, 100-, and 50-hour simple moving averages (SMAs). The 1H RSI tagged 70 then held above 40 and climbed above 70 again, showing persistent development of the bullish momentum.
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Breakout: During the latter 9/23 and part of 9/24 sessions, USD/CAD traded in a tight range between 1.1064 and 1.1087. As we begin the 9/24 US session, price pushed above this consolidation, and broke above the previous September high at 1.1098, making a new high on the month.
Bullish Trend: The daily chart shows even more reason to have a bullish outlook on USD/CAD. After price crossed above the 200-, 100-, and 50-day SMAs, it bounced off them as support. This is a bullish slingshot signal. The daily RSI has also held above 40 after tagging 70 showing maintenance of the bullish momentum.
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Bullish Target: Now that price has cleared the 1.11 level, USD/CAD looks poised to test the 1.1278, 2014-high. If price breaks above 1.1280, the pair will be at a high not seen since July 2009. This could be a strong bullish signal for the medium and long-term, but in the short-term, we should expect some consolidation under 1.13 especially if the daily RSI is above 70, in overbought condition, and even more so if there is a bearish divergence between RSI and price.
Failure: The market will be bullish unless we get a sudden reversal that pushes price below 1.09, which would break below the 200- and 50-day SMAs and the rising trendline from July. If the RSI also falls below 40 then, we are likely in a major consolidation, and the 2014-high of 1.1278 should be safe for the year.
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