USD/CAD Technical Analysis: Waiting to Confirm Topping

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Talking Points:

• USD/CAD Technical Strategy: Flat
• Support: 1.2635, 1.2381, 1.2187
• Resistance: 1.2801, 1.2968, 1.3158

The US Dollar may be preparing to turn lower against its Canadian namesake as negative RSI divergence warns of fading bullish momentum. A daily close below resistance-turned-support at 1.2365 exposes a Triangle pattern bottom at 1.2381. Alternatively, an advance above the January 30 high at 1.2801 opens the door for a challenge of the 38.2% Fibonacci expansion at 1.2968.

RSI divergence is not a sufficient-enough signal to justify entering short on its own without further confirmation. On the other hand, risk/reward considerations argue against entering long with prices in close proximity to resistance. We will remain flat for now, waiting for a more actionable opportunity to present itself.

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Daily Chart - Created Using FXCM Marketscope

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