USDCAD bulls finally decided to show up today, and in epic fashion. The pair has been sliding lower ever since breaking below the 1.2380 key horizontal level on April 15th, losing a total of 460 pips since that time.
However today’s price action suggests that a change in momentum is on the horizon. The bulls have now pushed the pair above a key resistance level that has rejected all previous advances since April 21st.
I mentioned this falling wedge in the weekend commentary as one to watch. I also mentioned that if a break of resistance occurs we should watch for a retest of the level as new support. Which brings us to the current scenario.
From here we can begin looking for buying opportunities on pullbacks to new support. While we may not see the pair rotate all the way back to 1.2070, any bullish price action between the 1.2070 and 1.2110 key levels could offer up a favorable entry.
Summary: Watch for a retest of the area between 1.2070 and 1.2110 as new support. Key resitsance comes in at 1.2204 and 1.2380.