The USD/CAD currency pair has demonstrated a strong rally from the 1.3549 level, gaining momentum last week without any signs of slowing down. This upward movement is expected to continue in the near term, with traders closely monitoring the 38.2% Fibonacci retracement level of the decline from 1.4791 to 1.3480, positioned at 1.3981. A decisive break above this point could signal further bullish momentum, potentially targeting the next significant resistance at the 61.8% retracement level near 1.4290.
On the downside, there is minor support around 1.3865, and a drop below this could neutralize the intraday bias, causing a pause or consolidation phase in the rally. Despite these short-term fluctuations, the broader trend remains bullish as price movements since the high of 1.4791 are considered corrective within a larger uptrend that began at the 2021 low of 1.2005.
If the pair fails to break above the key resistance at 1.3981 and instead faces rejection there, it may resume its downward correction, possibly falling below the previous low of 1.3480 at a later stage. However, a sustained move above 1.3981 would suggest that this corrective decline has ended, setting up a potential retest of last year’s high near 1.4791.
Long-term technical indicators also support this outlook. The rising 55-month exponential moving average (EMA), currently around 1.3588, remains intact and reinforces the ongoing uptrend that traces back to the historic low of 0.9056 in 2007. Yet, analysts note a bearish divergence on the monthly MACD indicator, which means caution is warranted as sustained trading below the 55-month EMA could indicate that the uptrend has completed its five-wave structure and that a medium-term correction toward the 38.2% retracement near 1.2600 might be underway.
Technical tools and analysis continue to be essential for traders navigating USD/CAD movements. Resources such as pivot point charts, volatility meters, and heat maps are widely used by forex traders to gauge market sentiment and potential turning points.
As ActionForex.com marks over two decades of providing detailed forex analysis since its inception in 2004, their expanded technical outlook now covers multiple currency pairs including USD/CAD, equipping traders with comprehensive tools to make informed decisions amid evolving market conditions.
In summary, while USD/CAD remains in an overall bullish trajectory supported by key moving averages and Fibonacci levels, traders should watch critical resistance at 1.3981 closely this week for clues on whether the rally will extend or give way to a deeper correction.
