USDCAD – widening daily cloud marks strong obstacle and may limit fresh upside attempts
The USDCAD edged higher and tests 1.2600 barrier (daily cloud base) at the beginning of US session on Monday.
The pair shows signs of regaining traction after strong upside rejection at 1.2687 and close in red on Friday, which signaled that recovery rally from 1.2248 (31 Jan low) might be running out of steam.
Daily cloud which twisted last week is widening and producing additional pressure, along with daily slow stochastic which is reversing from overbought territory.
On the other side, shallow dips on Friday / today were contained at 1.2555, with fresh attempts higher, suggesting that bulls did not completely run out of steam.
Bullish scenario requires lift above daily cloud (cloud top lies at 1.2637) and retest of pivotal 1.2663 barrier (Fibo 61.8% of 1.2920/1.2248 fall) to confirm continuation of recovery leg from 1.2248.
Otherwise, downside is expected to remain vulnerable while daily cloud caps, with increased risk on loss of 1.2555 handle and reversal signal on extension below 1.2520 (Fibo 38.2% of 1.2248/1.2687 upleg.)
Res: 1.2606; 1.2637; 1.2663; 1.2687
Sup: 1.2555; 1.2520; 1.2490; 1.2468