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.
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.
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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