USDCAD Recovers Quickly from Pullback

The USDCAD market encountered resistance for the second time this year upon reaching the supply zone at 1.39520. Following a pullback to the key level of 1.38190, USDCAD quickly recovered and is now making another attempt to break through this supply zone.

Demand Levels: 1.38190, 1.36170, 1.34410

Supply Levels: 1.38520, 1.41890, 1.42990

The formation of a double bottom pattern in October near the demand level of 1.34410 signalled a bullish reversal. Although price action dipped lower at this level, the Relative Strength Index (RSI) displayed a higher low in the oversold region, indicating increased buying strength and potential for upward movement.

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Once the price broke above the prior resistance level of 1.36170, a bullish crossover occurred with the nine-period Moving Average crossing above the 21-period Moving Average, confirming a bullish trend. At the supply level of 1.3952, the price briefly fell below the nine-period Moving Average, indicating a minor retracement; however, it remained above the 21-period Moving Average, reaffirming the underlying bullish market sentiment.

The recent pullback to 1.38190, a bullish order block, spurred increased buying interest, which drove the price back up to the resistance zone of 1.39520. Currently, USDCAD is once again testing this supply zone, with momentum building for a potential breakout. The swift recovery and maintained bullish indicators suggest that the pair could continue higher if resistance levels are breached.

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