In the early American session, the USD / CAD pair is trading below the rectangle pattern, and above the Sam of 21, showing a bullish signal, but finding strong resistance at the top of the pattern. The eagle indicator is showing an overbought signal, and there could be a correction in the next few hours.
The USD / CAD pair has managed to consolidate since May 10 above the psychological level of 1.20. The rally in recent days has allowed the pair to stay above the SMA of 21 for a new bullish momentum.
But the USD / CAD pair has a strong barrier in the 1.2120 / 40 area that acts as strong resistance. If you look at the chart, every time it has reached this level, the bearish force has appeared and dragged it down to the 1.20 level. Now we expect this to happen and the pair will find support at the 21 SMA.
If the dollar index remains above the psychological level of 90.00, it can give the bullish force that the USD / CAD pair needs, to overcome the resistance of 1.2140 and break the 200 EMA that now coincides with the 4/8 of murray, located at 1.2207. Above this level, there could be new rises on a sustained basis.
The technical reading of the eagle indicator shows that the USD / CAD pair is in the overbought zone, as the moving signal of the indicator is in the 95-point zone showing an imminent downward correction in the next few hours.
Our recommendation is to buy if the pair makes a technical bounce in the Sam zone of 21 around 1.2070. Above this zone, we can buy with targets at the 200 EMA around 1.2207.
Support and Resistance Levels for June 04 – 07, 2021
Resistance (3) 1.2231
Resistance (2) 1.2175
Resistance (1) 1.2131
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Support (1) 1.2075
Support (2) 1.2044
Support (3) 1.2018
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Trading tip for USD/CAD for June 04 - 07, 2021
Buy if rebound around 1.2070 (SMA of 21), with take profit at 1.2140 and 2207 (EMA 200), stop loss below 1.2032.
The material has been provided by InstaForex Company - www.instaforex.com