If risk can be defined and limited, traders will use it...
The USDCAD has been reacting to the tumbling oil prices over the last few days and stretched higher in the process.
Yesterday pair ran into resistance at the 1.2665 area. Today that level was overtaken and the pair continued the search higher rising to the next resistance targets at the 2015 swing highs. Looking at the daily chart below, the 1.27825 to 1.27973 area capped 3 rallies in January and March. Not far above those levels are the pairs highs for the year that span 1.2817 to 1.28333. Like yesterday, sellers able to define and limit risk slowed the rise higher and the price has retreated.
Looking at the 5 minute chart, the price has come tested the 100 bar MA on the 5 minute chart and the 38.2% of the trend move higher today (at 1.2730). A move below this level will be needed to extend the correction further.
There is a limit that can stop a move. The ceiling today allowed traders to define and limit risk. There will likely be stops should the price break higher later but for now the line held. Now with the price down and testing a support, the consolidation battle begins.
