USD/CAD records a new yearly high in the overbought zone.
USD/CAD had one of its best trading sessions for this year last week, gaining more than 1.5% to close at 1.36, while this week the pair continues to attract buying interest, with the price registering a fresh high for 2018 at 1.3631 on Thursday.
The technical indicators are still located in the bullish area, with the MACD stretching further above its red signal line and the RSI moving above 70. Yet the latter could also be an indication that the rally is overdone and hence negative corrections should not be a surprise in coming sessions.
Should the price retreat, the 1.3560 level which the bears were unable to break this week could provide immediate support. Moving lower, the focus will shift to the 1.3450-1.3385 restrictive area, while lower still, a violation of July 20’s peak of 1.3289 would increase speculation that the bullish phase has ended and a downtrend is in progress.
In the alternative scenario, traders would be eagerly looking for a break above today’s top of 1.3631 to increase buying orders. If that’s the case, the rally could last until 1.3792, the highest level marked in 2017. If bullish forces appear even stronger, 1.40 should be another resistance to keep in mind.
The recent bullish action turned the bigger picture more positive as well and with the shorter-term moving averages (MA) increasing distance above the longer-term MAs we could expect further improvement in the market.
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