The USD/CAD quotes are gaining this week and as a result, the buyers managed to overcome a significant resistance. In addition, the price has risen to the levels recently seen at the beginning of this year.
The USD/CAD exchange rate this week closed well above the level of 1.3436, where there is resistance resulting from the abolition of 61.8% of all downward movement observed in the first month of 2019. This breakthrough is important as it opens the way for further appreciation of the US dollar to CAD.
Breakout from consolidation
In March, the price consolidated between the aforementioned abolition of 61.8% and the abolition of 38.2% (level 1,3295) of this year’s declines. In April, the range decreased even further (resistance at 1.3390). On the other hand, the future direction of movement was decided within the last three days.
As can be seen on the daily chart below, Tuesday’s resistance was overcome at 1.3390, and Wednesday’s buyers impetuously defeated the level of 1.3436. Thus, the demand side opened its way to resistance at the level of 1.3664, where this year’s maxima falls.
During yesterday’s session, a small pin bar was formed, which is in the range of quotations from Wednesday, and therefore forms an inside bar formation. The downward movement from this pin bar gives the opportunity for correction to one of the supports shown below. There buyers can look for opportunities to take long positions according to the prevailing trend.