On May 16, a bullish pullback towards 1.3000 (61.8% Fibonacci level) was expected to offer a valid signal to sell the USD/CAD pair. However, a lack of a significant bearish rejection was manifested during recent consolidations.
On May 18, temporary bullish fixation above 1.3000 (61.8% Fibonacci level) opened the way towards the 1.3180 level where significant bearish pressure was originated.
Bearish persistence below 1.3000-1.2970 (61.8% Fibonacci level) was needed to enhance bearish momentum in the market.
However, on August 18, signs of bullish recovery were manifested around the price level of 1.2830 which led to the current bullish breakout above 1.3000.
The USD/CAD pair was trapped between the price levels of 1.3000 (61.8% Fibonacci level) and 1.3360 (50% Fibonacci level) until a bullish breakout took place one month ago.
Note that the USD/CAD pair was challenging the upper limit of the depicted flag pattern around 1.3360-1.3400 which failed to apply enough bearish pressure on the pair during the first attempt.
Shortly after, a significant bearish engulfing weekly candlestick was expressed by the end of the week indicating strong resistance around 1.3550.
Bearish persistence below the price level of 1.3300 (50% Fibonacci Level) was achieved. This allowed a further decline towards 1.3200, 1.3090, and 1.2990 (61.8% Fibonacci Level) where bullish rejection was expressed as anticipated.
On the other hand, a bullish breakout above 1.3360 (50% Fibonacci level) will probably liberate a quick bullish movement towards 1.3700-1.3750 (the upper limit of the depicted channel).
The material has been provided by InstaForex Company – www.instaforex.com