USDCAD bounce off from critical weekly trend line support, another bullish rally?

The USDCAD pair has been sharply falling in the global market after it hit the critical resistance level at 1.29189.From that level, the bears have taken control over the market and managed to breach the dynamic support level at 1.26637.After the clear break of the 100 day SMA, most of the professional traders went short and made a decent profit by riding the bearish rally. In the last week, the pair found some solid support at 1.22542.Though the bears tried hard to breach that critical support level, the bulls financially managed to establish their strength prior to the closing of the last trading week.

USDCAD daily chart analysis

Figure: USDCAD bounces off from critical support level

From the above figure, you can clearly see that the pair has bounced off after testing the critical support level 1.22542.Currently, the pair is most likely to head towards the 100 day SMA (red curve) in the daily chart. A  daily closing of the price above the critical resistance level at 1.25865 will ultimately lead this pair towards the next major resistance level at 1.26594.This level is going to provide significant amount selling pressure to the USDCAD pair. If the bulls manage to clear that resistance level, it will be clear confirmation of the potential bottom formation near the major support level at 1.22542.On the contrary, a decisive move of the price from that level will refuel the bears which will ultimately push this pair towards the low of 2nd February 2018.

USDCAD weekly chart analysis

Figure: USDCAD bounce off from weekly trend line support

From the above figure, you can clearly see that the bulls are trying to take full control of the market after the pair hit the weekly trend line support level at 1.22542.Most of the professional traders are expecting another retest of the bullish trend line support level and bullish price action confirmation signal will be an excellent opportunity place fresh longs. The first bullish target is the weekly 200 day SMA (green curve).From that level, the sellers will try to take control of this market. However, a weekly closing of the price above the 200 days SMA will turn the overall bias for this pair from bearish to bullish. If the bulls manage to clear the weekly 200 SMA, we have 100 weekly just above that level. So in order to see an extended bullish rally in the USDCAD pair, the bulls have to do a lot of work.

Considering the daily and weekly chart technical analysis the overall bias for the USDCAD pair is strongly bullish. However, prior to the clear breakout of the weekly 200 SMA, the bears will try hard to break below the bullish trend line support level at 1.22542.So placing long orders at the current price level will be an immature act. We will wait for the clearer signal to trade this pair.