USDCAD trading heading towards rectangle support level, bulls wait on the sideline

There has been a decent bullish rally in the USDCAD pair after it hit the critical support level at 1.20532.Most of the expert traders went long and made a decent profit by riding the medium term bullish trend. After rejecting the critical resistance level at 1.29144 the pair has formed a consolidation structure and most of the trend traders are waiting for a clear breakout to trade this pair.in the last trading week the pair rejected the rectangle resistance level at 1.29033 by forming a nice bearish pin bar. However, most of the leading investors are expecting a decent bullish bounce from the USDCAD pair near the support level at 126683.Any bullish price action confirmation signal will be a good sign to execute long orders at that level.

USDCAD daily chart analysis

Figure: USDCAD trading within the 100 and 200 SMA in daily chart

From the above figure, it’s very clear that the bulls and bears are stuck in a confined region and there is nothing for the trend traders. Since the medium-term trend is bullish, executing long orders with bullish price action confirmation signal at 1.126683 level will be logical. However, if the bears manage to breach this level then the ultimate target for this pair would be the red line (100 day SMA).From that level, we might see some decent bullish bounce but a daily closing of the price below the critical support level at 1.26038 will confirm the end of a medium-term bullish trend. On the contrary, we need to breach the 200 days SMA above to see the further bullish movement of this pair.

USDCAD weekly chart analysis

Figure: USDCAD trading above the 200 weekly SMA

In the weekly chart, you can clearly see that that the pair has sharply fallen in the global market after breaching the bullish trend line support at 1.31560.However, the found some strong support at 1.20801 and formed a bullish morning star pattern. Most of the long-term investors are currently looking for higher price to sell this pair bearish price action confirmation signal. If the current weekly support level at 1.27194 holds then we will see a medium-term bullish rally towards the 100 periods weekly SMA. From that level, we might see some significant selling pressure. However, a daily closing of the price above the critical resistance level at 1.31250 will ultimately turn the overall bias of this pair strongly bullish.

In the last FOMC meeting minute the FED have already hiked their interest rate but still, the dollar bulls are waiting on the sideline since the statement from FED chairperson Janet Yellen was very dovish. However, the recent tax reform policy has boosted the U.S dollar index little bit higher in the global market. Considering the technical and fundamental parameter buying the USDCAD pair at the deep with tight stop loss will be a justified entry. However, a clear break of the 200 weekly SMA support level will clear out the bulls from the market.