USD/CAD Price Analysis: Bullish flag warrants an impulsive rally, 1.4000 eyed
- A formation of a bullish flag is setting a base for recording fresh two-year highs around 1.4000.
- Market sentiment has turned negative which supports the greenback’s appeal.
- The RSI (14) is aiming to enter into the bullish range of 60.00-80.00.
The USD/CAD pair has rebounded firmly after hitting an intraday low of 1.3726 in the Tokyo session. The asset is oscillating around 1.3750, at the press time, and is expected to overstep the same confidently as the market sentiment has turned extremely sour amid soaring hawkish Federal Reserve (Fed) bets. Also, the S&P500 has eased off its entire gains recorded in the Tokyo session.
On a four-hour scale, the asset is forming a Bullish Flag pattern that signals an impulsive bullish wave after the breakout of the consolidation. Usually, the consolidation phase indicates a most auctioned region where those investors place bets who prefers to enter an auction after the establishment of an upside bias. Also, investors add more longs as they see a continuation of the uptrend after a time-corrective pause.
It is worth noting that the 20-and 50-period Exponential Moving Averages (EMAs) have defended their bearish crossover at around 1.3600, which indicates that the upside is intact.
Meanwhile, the Relative Strength Index (RSI) (14) is attempting to cross the 60.00 figure for a sheer bullish momentum.
Should the asset break above the previous week’s high at 1.3833, the greenback bulls will expose the asset to hit a fresh two-year high at 1.4000. A breach of the latter will drive the major towards May 2020 high at 1.4173.
On the contrary, a decisive break below the round-level support placed at 1.3600 will drag the asset towards the psychological support at 1.3500, followed by September 19 high at 1.3344.
USD/CAD four-hour chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
