USD/CAD has been steadily retreating after its decisive breakout from a Symmetrical Triangle (ST) pattern on the daily chart. This pullback has brought the pair back to the 50-day Simple Moving Average (SMA) at 1.3696, coinciding with the upper trendline of the ST. This level now serves as a critical support zone, and a bounce from here could potentially signal a resumption of the bullish trend.
Bullish Targets Remain in Play
The initial breakout on June 7th activated bullish targets for the USD/CAD pair:
- Conservative Target: 1.3881, based on a 0.618 Fibonacci extension of the ST’s height.
- Aggressive Target: 1.3978, representing a full 100% extension of the ST’s height.
While recent price action has been predominantly bearish, the overall bullish sentiment remains intact. A decisive move above the June 11th high of 1.3791 would further confirm the bullish bias and increase the likelihood of reaching these targets.
Downside Risks and Reversal Potential
However, traders should be mindful of potential downside risks. A break below the June 7th low of 1.3663 could cast doubt on the uptrend’s sustainability. Moreover, a breach of the ST’s lower trendline around 1.3640 would likely trigger a reversal, targeting the 0.618 Fibonacci retracement level of the ST’s height near 1.3518.
Key Takeaways:
- USD/CAD is currently testing a crucial support zone at the 50-day SMA and the ST’s upper trendline.
- Bullish targets of 1.3881 and 1.3978 remain valid if the uptrend resumes.
- A break below 1.3663 or the ST’s lower trendline could signal a bearish reversal.
