Baxia Markets
February 02, 2024

USDCAD Rebounds: Charting the Course for a Potential Bullish Reversal

market analysis header imageIn recent trading sessions, USDCAD has staged a notable rebound, interrupting a five-day bearish trend. This retracement has been robust, reaching up to the significant 61.8% Fibonacci level of the recent bearish rally. Traders are closely watching key levels and technical indicators for signs of a potential bullish reversal.

USDCAD Rebounds: Charting the Course for a Potential Bullish Reversal

The depth of the retracement, reaching the 61.8% Fibonacci level, serves as a crucial point for assessing the strength of the bullish momentum. A decisive move beyond this level, especially above the key resistance at 1.3464, could signify a substantial shift towards a bullish bias.


A reliable bullish reversal signal comes from the impending golden cross of the Exponential Moving Averages (EMA) 50 and 200. The acceleration of EMA 50 towards EMA 200 indicates a weakening bearish momentum. Furthermore, prices breaking and holding above EMA 200 reinforces the potential for a sustained upward trend.


Examining the Volume Profile indicator's value area reveals that prices are hovering above the value area's high. This bullish sign suggests strong buying interest in the market, adding weight to the case for a potential bullish continuation.


Both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) contribute to the bullish narrative. MACD's histogram and signal line crossing above the 0 line indicate positive momentum, while RSI breaking above the 60% level and maintaining its position above 40% signal strength in the upward direction.


While EMA 50 and 200's golden cross remains pending, other indicators strongly point towards a bullish sentiment. Traders are advised to keep a close eye on the confirmation points, including the breach of the 61.8% retracement level and the EMA golden cross, to validate the potential long-term bullish reversal in USDCAD.


Key Takeaways:

  1. Bullish Reversal Signals: USDCAD exhibits signs of a potential bullish reversal, marked by a robust rebound from recent bearish trends.

  2. Technical Confluence: The technical landscape showcases a deep retracement, suggesting a strong retracement of the recent bearish rally.

  3. EMA Golden Cross: Traders closely watch for the EMA 50 and EMA 200 golden cross, a key confirmation point signaling a potential shift in the long-term trend.

  4. Fibonacci Retracement Levels: Critical attention is given to the breach of the 61.8% retracement level, providing additional confirmation for bullish opportunities.

  5. Volume Profile Indicator: The Volume Profile Indicator highlights a bullish sentiment as prices hover above the value area's high, adding further weight to the potential upward movement.

  6. MACD and RSI Confirmation: Oscillator indicators such as MACD and RSI signal bullish trends, with crossovers and level breaches reinforcing positive market sentiment.

  7. Market Resilience: USDCAD's rebound showcases resilience in the face of recent market challenges, attracting attention from traders seeking strategic opportunities.

  8. Confirmation Points: Traders are advised to monitor key confirmation points, including Fibonacci levels, EMA crossovers, and the broader technical landscape, for a comprehensive trading strategy.

  9. Strategic Insights: Traders are encouraged to explore the technical intricacies of USDCAD's rebound, gaining insights into potential trading strategies amid evolving market conditions.

  10. Market Watch: Stay tuned for updates on USDCAD's price action, keeping a close eye on critical technical indicators and confirmation points for informed decision-making.


Key Economic Releases to Watch Today

EUR, CPI (YoY) (Jan)

Forecast 2.7% vs Previous 2.9%

GBP, BoE Interest Rate Decision (Jan)    

Forecast 5.25% vs Previous 5.25%

USD, Initial Jobless Claims

Forecast 213K vs Previous 214K


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