USD/CAD Candlestick Analysis: Support Now Below 1.21

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Talking Points:

• USD/CAD Strategy: Flat
• Topping Pattern Awaits Follow-Through
• Fib Support Above 1.24 Figure in Focus

The US Dollar declined against its Canadian counterpart as expected having marked a top with bearish Dark Cloud Cover and Bearish Engulfing candlestick patterns as well as negative RSI divergence. Support is now at 1.2078, the 23.6% Fibonacci retracement, with a break below that exposing the 38.2% level at 1.1611. Alternatively, a turn back above the 14.6% Fib at 1.2366 targets the March swing high at 1.2834.

The overall USD/CAD trend continues to favor the upside. With that in mind, we will look to current weakness as an opportunity to establish a long position at more attractive levels once the downswing is exhausted.

Weekly Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com