USD/CAD – Triangle Support at 1.2350 Continues to Hold

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USD/CAD - Triangle Support at 1.2350 Continues to Hold

Since pushing almost to 1.28, USD/CAD has been consolidating, retreating to 1.2350 before starting to form a descending triangle as we can see in the 4H chart.

USD/CAD 4H Chart 2/17
usdcad 4h chart 2/17
(click to enlarge)

The 1.2350 is the descending triangle support and once again during the 2/17 US session, it has acted as support. There is a strong bullish 4H candle that is reversing the previous bearish candle, suggesting that there are strong buyers here in the 1.2350-1.24 area. The current near-term target would be the 100- and 50-period SMA cluster starting at 1.25.

The 4H RSI has cracked below 40 a few times, reflecting shakiness to the prevailing bullish momentum. It has not pushed below 30 however, so there is no sign of bearish momentum.

If price can clear the 1.25 handle, the USD/CAD would be poised to test the triangle resistance around 1.26. Above that, a bullish continuation scenario would be in play, with the 1.28 level, up to the 1.30 handle in sight.

USD/CAD Monthly Chart 
usdcad monthly chart 2/17
(click to enlarge)

The 1.30 level is the common highs in 2008-2009. The high stretches to about 1.3060. The monthly chart shows that indeed, USD/CAD has entered a key support/resistance pivot area with the RSI at overbought levels. Maybe we can expect some further upside in the short-term, but we should monitor our bullish outlook.

In fact, a break below 1.2350 should trigger at least some short-term bearish correction, with the 1.20 handle in sight.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.