USDCAD Resumes the Market Trend in an Upward Direction

USDCAD Analysis – July 6

USDCAD resumes the market trend in an upward direction after a long period of ranging between two major significant levels. Until May 31, 2021, the USDCAD market had been in a bearish move, forming lower highs and lower lows. The market is currently between two significant levels, 1.3080 and 1.2460, as it forms higher highs and higher lows.

USDCAD Major Levels

Resistance levels: 1.3400, 1.3080
Support levels: 1.2460, 1.2300 USDCAD

USDCAD Long-Term Trend: Bullish

For the past six months, USDCAD has been ranging and struggling to break out of its six-month low and high. As the market kept ranging within the levels and Bollinger Bands (BB), the bulls pumped the market till it hit a significant resistance level at 1.3080, after which it crashed down to form a higher low. Due to a large volume of buy limit orders placed around this higher low region, the price rapidly rose to the resistance level of 1.3080. This leaves a demand zone as an order block and a fair value gap (FVG) that must be filled later in the future as the market trends downward.

In May 2022, a bullish divergence was confirmed by the Relative Strength Index (RSI), which formed lower lows as price formed higher lows in the market. After the higher low was formed on the price chart, the price touched the significant resistance level at 1.3080 for the second time in a year, thereby creating a double top. After the formation of the double tops, buy-side liquidity (BSL) exits above the tops, and market makers will seek the BSL to either reverse or continue the market trend later in the future.

USDCAD Short-Term Trend: Bearish

On the four-hour chart, the Relative Strength Index (RSI) indicates that the market is just getting out of the overbought region, and the price still needs to sink downward till the neckline of the double tops is broken. Once the double top neckline is broken, the market trend might continue downward to further decline into the demand zone to fill the fair value gap.

Due to the bullish divergence confirmed by the higher lows of the price and the lower lows of the Relative Strength Index, USDCAD is expected to resume its market trend in an upward direction, and it’s most likely impossible for the price to break the demand zone at 1.2520 before clearing off the liquidity above the tops at 1.3080.

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