The pair established a prominent top around 1.1220 which pushed the USD/CAD pair back to the previous congestion zone between 1.0850 and 1.0960.
This congestion zone provided a considerable support at retesting on February 19. This led again towards 1.1190 where the USD/CAD pair topped on February 21 establishing a possible Double Top reversal pattern.
Price levels of 1.0950 and 1.0850 correspond not only to a previous congestion zone but also to the uptrend line that was initiated in September 2013, thus the market may offer a good BUY opportunity around 1.0900 with stop loss as daily closure below 1.0850.
In the long-term, the bullish demand expressed at 1.0960 is probably pushing towards 1.1235 corresponding to 50% Fibonacci.
Currently, the pair is roughly trapped within a new congestion zone located between 1.0960 and 1.1180.
A bullish breakout is more likely to occur based on the previous weekly candlestick (a bullish hammer) which indicates a strong bullish movement yet to occur. However, some bearish correction isn't excluded especially after the previous two daily candlesticks which show indecision of the market.
Generally, any bearish corrective movement should be contained above 1.1000. Otherwise, the ongoing bullish structure will be threatened.
It's important to note that a daily fixation above 1.1180-1.1235 will probably open the way towards the next resistance level around 1.1650 which corresponds to 61.8% Fibonacci which is prominent on the weekly chart.
The material has been provided by InstaForex Company - www.instaforex.com
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