USDCAD testing major resistance level, strong challenge for the bulls

The has been a decent bullish rally in the USDCAD pair after it hit the critical support level at 1.22501.Most of the long-term investors went long after the pair hit the long-term trend line support. The ongoing crisis in the energy field pushed the price of oil significantly lower which boost the USDCAD pair higher. In the last trading week, the U.S dollar index pushed higher after breaking the major resistance level 90.42.Prior to the closing of the last trading week, the dollar fell a little bit in the global market after the massive confusion of the FED rate hike policy. Currently, the USDCAD pair is testing the long-term bearish trend line and a daily closing the price above the critical resistance level at 1.28876 will confirm the establishment of the medium term bullish trend line.

USDCAD daily chart analysis

Figure: USDCAD pair testing the major resistance level

From the above figure, you can clearly see that the bulls are trying to break the major resistance level at 1.28876.A clear break of that critical resistance level will ultimately lead this pair towards the next major resistance level at 1.31639.On the contrary, if the bears manage to take control of the price from this level, the pair is most likely to drop towards the dynamic support level at 1.26960(200 SMA).From that level, we might see some bullish bounce but the larger drop is expected after the rejection of the current resistance level.

USDCAD weekly chart analysis

Figure: USDCAD bulls surging higher to clear 100 weekly SMA

In the weekly chart, the pair is currently facing strong resistance level at 1.29124.This level is also reinforced with the 100 weekly SMA. Most of the long-term investors are waiting for a clear break of the 100 weekly SMA to execute fresh long orders. If the pair falls below the current price level, we might see another retest of the 200 weekly SMA. From that level, the bulls will again try to gain control of this market. But a decisive break below the 200 weekly SMA will ultimately lead this pair towards the long-term weekly trend line support level. Most of the expert traders will be looking of bullish price action confirmation signal near the trend line support level to enter long. The first initial bullish target for this pair would the major resistance level at 1.29560.A break above that level will lead this pair towards the next major resistance level at 1.32667.

On the downside, we have plenty of support level, and the bears will have a tough time to break below the bullish trend line support level at 1.22564.If it breaks below that level, the ultimate target for this pair would be the next support level at 1.20742.Considering the weekly and daily time frame analysis, trading the USDCAD pair at the current price level will be an immature act. It’s better to wait on the sideline until we get more precise signal in the market.