USD/CAD Price Analysis: Potentially beginning new leg higher within range

USD/CAD

FXStreetJul 10, 2024 12:10 PM

USD/CAD is probably beginning a new up leg within a range.
The MACD has crossed over its signal line adding further credence to the bullish thesis.
A mini Bull Flag may also have formed at the range lows.

USD/CAD has been trading in a range since the start of May. At first it looked like the pair had formed a Symmetrical Triangle pattern but the pattern failed to evolve.

The pair’s lack of directionality means the short-term trend is probably now sideways. Given the “trend is your friend” the odds favor a continuation of USD/CAD’s sideways oscillations.

USD/CAD 4-hour Chart

More recently USD/CAD has found support near the range’s floor at roughly 1.3589 and bounced. As it is in a sideways trend it will probably start moving up towards the range ceiling now at roughly 1.3788.

The Moving Average Convergence Divergence (MACD) indicator crossed above its red signal line on July 5 after the initial bounce. This is a bullish sign and suggests the next leg higher within the range is about to unfold. Note how in the past, crossovers of the MACD and signal line coincided with price turns within the range.

USD/CAD has been trading in a mini-sideways consolidation (light blue shaded area on chart above) since July 5. This might be the “flag square” part of a small Bull Flag Pattern. Such a pattern promises further upside if price breaks out of the top of the rectangular consolidation phase. The target for the follow-through higher after the breakout is situated at 1.3764, the length of the initial bounce or “flag pole” extrapolated higher.

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