The USD/CAD did indeed reject 1.0250 last week, and in the process held an ascending channel on the Weekly chart and formed a bullish engulfing bar at the same time. First, the channel has formed from the lows in May near parity, with a mid point in June at 1.0317 and the third level of the lower band turns out to be the support zone at 1.0250. The upper band of the channel working from the top down is the high set 5 weeks ago at 1.0608 with the mid point being the high from February at 1.0340. All of these zones are clear support & resistance levels going forward. The weekly bullish engulfing candle is potentially a strong buy signal for this pair, especially considering the support zone on which it is based. We have come very close to breaking the high of last week already but not just yet. If we do indeed close above 1.0400 on a 4 hour time frame of higher there is a good chance this pair will continue to rise on the weakening CAD. Watch for a breakout and then a pull back before jumping on the bull wagon...or at least trade with caution as the Loonie won’t stay weak for too long with a strong economy and a healthy oil & gas industry.
