A bullish breakout above the previous consolidation zone between 1.2400 and 1.2800 was performed on July 15 (shown on the weekly chart).
A significant bearish rejection was observed around 1.3450. Hence, another consolidation range was established from 1.3450 down to 1.2800.
On December 7, a bullish breakout above 1.3450 (upper limit of the recent consolidation range) enhanced the bullish side of the market. Hence, a bullish visit to the resistance at 1.4120 (Fibonacci Expansion 100%) occurred.
Bullish persistence above 1.4150 enhanced the bullish side of the market towards 1.4650 (141.4% Fibonacci expansion) where an evident bearish rejection was expected (bearish engulfing weekly candlestick).
The 1.4120 level (Fibonacci Expansion 100%) stood as a significant resistance level where significant bearish rejection was applied.
Although the area of 1.3050-1.3250 was expected to offer bullish support for the USD/CAD pair, bearish breakdown of the same price zone was executed as depicted on the daily chart.
The price level of 1.3300 constituted a significant resistance as it corresponds to the 50% Fibonacci level and the backside of the broken weekly uptrend where a valid sell entry was suggested on March 24.
Since March 18, the USD/CAD pair has been trapped within the consolidation range between 1.3300 – 1.2970 until recent bearish breakdown occurred on April 11.
Traders who missed the initial entry around 1.3300 should consider the current pullback towards 1.2975 (the 61.8% Fibonacci level) as a valid signal to sell the USD/CAD pair. Initial T/P levels should be located at 1.2770 and 1.2550.
The material has been provided by InstaForex Company – www.instaforex.com
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