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USDCAD consolidates the sharp gains on the day

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Price runs above the 200 day MA today

Today, the USDCAD cracked above its 200 day moving average for the first time since July 21, 2020. That is two day’s short of the one year ago.  The 200 day moving average comes in at 1.2626. The current price is trading at 1.2765.   

USDCAD on the daily chart

The break was met with impressive buying momentum which saw the price surge to a high price for the day at 1.28066. That high was reached toward the end of the London morning session.  Since then the price has been consolidating up and down with a  North American low at 1.2730.

Looking at the 5-minute chart below, the correction off the high has seen the price test its rising 100 bar moving average (blue line).  So far buyers had come in near that moving average level, and in doing so, has been able to keep the intraday bias more to the upside.  Having said that, highs have been lower.  So there is a battle between the buyers and sellers as the price consolidates. 

USDCAD on the 5 minute chart

What traders will be watching for now?

In the shorter term, traders on the topside, will watch for a move above the 1.2781-85 area to tilt the bias more to the upside intraday. That area is home to a swing area intraday (see red numbered circles). Get above, and the consolidation should be over, with a run to the high above eyed.

On the downside in the short term, traders will be watching the rising 100 bar MA at 1.27536. If the price can move below that MA line and stay below, the sellers would then look toward the 1.2724-30 area. The 1.2730 is the low in the North American session. The 1.2724 is the 50% midpoint of the trend run higher today. Moving below should solicit more probing to the downside with the rising 200 bar moving average on the 5-minute chart at 1.26972 as the next target. 

SUMMARY: Overall the USDCAD break above the 200 day MA was impressive. Not only is it the first break in over a year, but the break was met with strong buying.  

In the short term, the  pair is consolidating the gains and toys with the 100 bar moving average on the five minute chart and the 50% retracement of the trend move higher today at 1.2724.  A move below both those levels would increase the bearish bias intraday. Conversely a move above 1.2785 would likely see a retest of the high price above at 1.28066.  Get above that level and the door opens for further upside momentum.

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