The USD/CAD currency pair is experiencing upward momentum, trading at approximately 1.4010 during the Asian session on Thursday. This marks the fifth consecutive day of gains for the pair, which is moving within an ascending channel pattern. The projected upper contour of this channel is around the 1.4080 level, where traders will be watching for signs of a potential pullback.
Currently, the 14-day Relative Strength Index (RSI) is hovering just below the 70 threshold, an indicator that suggests the market is exhibiting strength without being overbought. A rise past the 70 level could spark a downward correction, potentially retracing the pair back towards the 1.4000 to 1.3950 range. This possibility highlights the importance of keeping an eye on overbought conditions, as they may precede a market reversal.
If the USD/CAD pair successfully breaks through the 1.4080 ceiling, it could strengthen the existing bullish trend further, pushing the pair towards the next notable resistance level at 1.4173, which was last tested in May 2020. Traders should remain vigilant for this breakout, as it may signify a more sustained upward movement.
On the support side, the next immediate reference is the nine-day Exponential Moving Average (EMA), located at 1.3943, followed by the 14-day EMA at 1.3917. Should the price dip below these key levels, it could signal a weakening of the bullish momentum, increasing the likelihood of a decline towards the lower boundary of the ascending channel, positioned at 1.3860. Thus, the coming sessions will be crucial for determining whether the bullish trend can hold or if corrections will take precedence.
