In our previous USDCAD analysis we warned bears that although trend remained bearish and price continues making lower lows and lower highs, there are some signs that show limited downside potential and possible reversal to the upside.
Blue line- bullish divergence
As we mentioned in our last post, we prefer to be neutral if not bearish at current levels because the chances of an upward reversal are high. The bullish RSI divergence combined with the downward sloping wedge pattern are the two most important things we notice in the Daily chart. Price today bounced back to the upper wedge boundary challenging resistance at 1.2720. Trend remains bearish but we expect an upward reversal as long as the RSI does not break below the blue support trend line. Bounce target is at 1.30-1.31.