USD/CAD surged on Friday, breaking above two resistance (now turned into support barriers) in a row. That said, the rally was stopped near the 1.3423 level, and today, the pair has been oscillating slightly below that barrier. Last Wednesday, the pair emerged above the steep downside resistance line drawn from the high of May 31st, and then, it started forming higher peaks and higher troughs above a new upside tentative line, taken from the low of June 11th. Therefore, having all these technical signs in mind, we will hold a positive stance with regards to the short-term picture.
In order to get confident on more bullish extensions though, we would like to see a decisive push above the 13430 zone, a resistance defined by the highs of June 5th and 6th. Something like that could open the door for another rally, perhaps towards the 1.3485 area, marked by the inside swing low of May 30th. That said, before the next leg north, we see the case for a corrective setback, perhaps for the rate to challenge the aforementioned tentative upside line, from where the bulls could take the reins again.
The case for such a retreat is supported by our short-term oscillators, which detect slowing upside speed. The RSI edged up but flattened near its 70 line. The MACD, although above both its zero and trigger lines, has started showing signs of topping.
Nevertheless, we repeat that as long as a potential retreat stays above the tentative upside line, we would still see a decent chance for the bulls to jump back into the action. In order to start examining whether they have abandoned the battlefield, we would like to see a decisive dip below 1.3345. Such a move would confirm a break below the upside support line and may initially pave the way towards the low of June 13th, at around 1.3300. Another break, below 1.3300, could extend the slide towards the low of the previous day, near 1.3275.
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