The USD/CAD currency pair is currently attempting to reestablish itself within an ascending channel, reflecting a prevailing bullish sentiment. Trading near the 1.3800 level during the Asian trading session on Friday, the pair is benefiting from gains achieved in prior sessions. The recent trend analysis indicates the USD/CAD is testing the lower boundary of the ascending channel; maintaining this position could bolster the bullish outlook.
Technical indicators present a nuanced picture. The 14-day Relative Strength Index (RSI) is hovering close to 70, signaling a strong bullish momentum. However, surpassing the 70 level could indicate overbought conditions, potentially leading to a downward correction in the near future. Should the pair break below the nine-day Exponential Moving Average (EMA) at 1.3741, it could trigger a bearish trend, raising concerns about a short-term pullback.
Looking at the resistance levels, the immediate barrier resides at 1.3810, which coincides with the lower boundary of the ascending channel. A successful retest and subsequent rebound into this channel would support continued bullish movement, allowing the pair to target levels near the upper boundary around 1.3920. A notable resistance point is the 25-month high of 1.3946 reached on August 5, which could exert additional pressure if the pair approaches it.
In terms of support, the nine-day EMA at 1.3741 serves as a key level. If the currency pair falls below this indicator, it may shift into a bearish phase, possibly steering the rates towards the prior resistance at 1.3620, now functioning as support. Below that, the psychological level at 1.3600 could also come into play, further complicating the short-term outlook for the pair.
