- Lonnie bulls are firmer below 200-period EMA.
- The formation of ascending triangle signifies volatility contraction which will be followed by an expansion ahead.
- For the downside, the RSI (14) needs to drop below 40.00.
The USD/CAD pair has witnessed the carnage from its recent high of March 15 at 1.2870. On Monday, the asset has remained in a narrow range of 1.2591-12610.
On a daily scale, USD/CAD is auctioning in an ascending triangle formation. The lower end of the ascending triangle is placed from 1 June 2021 at 1.2007 while the upper end is marked from 20 August 2021 at 1.2949. The formation of an ascending triangle indicates consolidation with a positive bias. Usually, this kind of pattern display volatility contraction followed by an expansion in the same.
The pair is trading below the 200-period Exponential Moving Average (EMA) at 1.2657, which signals a subdued performance ahead.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals a consolidation move. However, a slippage below 40.00 levels will set a bearish stage for the major going forward.
Should the pair test the lower end of the ascending triangle formation at 1.2570, the asset may attract significant bids which will send the pair to 21-period EMA at 1.2713, followed by March 15 at 1.2870.
For the downside, the loonie bulls need to violate January 19 low at 1.2451, which will drag the pair to 21 October 2021 low at 1.2288. Breach of the latter will send the pair to its ultimate target to 27 May 2021 high at 1.2142.
USD/CAD daily chart
-637834368669589065.png)
