Failed Double Top, Bullish Continuation: This week, USD/CAD held off a bearish attempt coming down from a double top pattern that was completed last week. However, the failure to have a significant correction after the double top suggested that bulls are still in charge. It is noteworthy that the 4H RSI held above 40 for the most part, preserving the bullish momentum formed when it popped up above 70, and even 80 at the end of July. Also, price held above a rising trendline that comes up from the July 11-low of 1.0630. Finally, price has come back above the 100-, and 50-period Simple Moving Averages (SMAs) in the 4H chart, reviving the bullish bias.
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During the 8/20 session, USD/CAD price came up to the August high at 1.0986 and failed to breakout. So far in the 8/21 session, loonie has strengthened, and the USD/CAD continued to retreat.
Central Pivot: However, the bullish outlook still remains outside of the intra-session price action. If the current dip extends toward 1.0930, we should look out for buyers, especially if the 4H RSI approaches the 40 level and stalls. Around 1.0930. we have the central pivot of August’s range action. Just below 1.0930, we have the 100-, and 50-period SMAs.
Bearish Case: A break below 1.0920 might spell trouble for the bullish outlook, especially if the 4H RSI also dips below 40. In this scenario, The pressure will then turn towards the 1.0860 area. A break below 1.0860 will be needed to put in a price top and signal a bearish outlook. Otherwise, the USD/CAD mode is bearish in the near-term, but neutral in the short-term, and bullish in the medium-term.
Bullish Case: If the 1.0930 level holds as support, the bullish bias remains, and there will still be upside risk first to the 1.0986 high, and then the 1.0150 April-high.
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