USD/CAD is trading in the green at 1.2086 level above a strong support zone. The price action has signaled that the pair is too oversold to resume its downside movement.
Technically, the pair may develop a new leg higher if the US Dollar Index resumes its growth. The DXY (USDX) was oversold as well and now it tries to come back higher in the short term after yesterday's mixed US data.
The US is to release significant economic data today such as the Chicago PMI, Revised UoM Consumer Sentiment, Personal Spending, Personal Income, Goods Trade Balance, and the Prelim Wholesale Inventories.
In line with expectations figures or better could help the USD to resume its current appreciation.
USD/CAD Oversold!
USD/CAD found strong support on the 1.2061 historical support. It has registered only false breakdowns through this level signaling strong demand around this level.
Still, the pressure remains high despite its failure to take out the support area. Personally, I believe that only a new higher high may really signal a temporary upwards movement.
So, registering a valid breakout above the 1.2144 level could signal further growth towards the upper median line (UML) of the descending pitchfork. Stabilizing above the median line (ML) could indicate a potential growth or an extended sideways movement.
Forecast!
Buy USD/CAD if the price jumps and stabilizes above 1.2144 former high. Also, a valid breakout above the R2 (1.2203) could really announce a broader upwards movement. The upper median line could be used as an upside target.
The material has been provided by InstaForex Company - www.instaforex.com