USD/CAD traded higher on Friday after it hit support at 1.2665. The recovery brought the rate above the 1.2715 level, marked by the peak of Feb. 3, confirming a forthcoming higher high, which, in our view, sets the stage for further advances.
The break above 1.2715 may have opened the way towards the peak of Jan. 28, at 1.2798, or the peak of Jan. 6, at 1.2813. Slightly higher lies the 1.21835 barrier, marked by the high of Dec. 29, the break of which could carry more bullish implications, perhaps paving the way towards the 1.2918 barrier, marked by an intraday swing high formed on Dec. 22.
Looking at our short-term oscillators, we see that the RSI lies above 50 and points up, while MACD runs above both its zero and trigger lines. Both indicators detect upside speed and support the notion for further advances in this exchange rate.
On the downside, we would like to see a dip below 1.2648 before we start examining whether the bears are under control. This would confirm a forthcoming lower low and may initially pave the way towards the low of Jan. 26, at 1.2560. If the bears are unwilling to stop there, we could see them diving towards the 1.2453 zone, which provided strong support between Jan. 13 and 20.
