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Overview:
Since bulls have pushed further above the upper limit of both depicted bullish channels and the 79.6% Fibonacci level the market looks quite overbought.
However, bullish pressure is still expressed as the previous weekly closure came above 1.2550 (consolidation zone mid-line).
Successive lower highs were established within the wedge pattern. However, the market expressed a bullish breakout above 1.2550-1.2600 shortly after.
The market failed to hold above 1.2650 - 1.2680 (previous highs) resulting in the formation of a double-top pattern that calls for confirmation (daily closure below 1.2350).
On the other hand, the support level around 1.2350 (lower limit of the wedge pattern) and 1.2300 (79.6% Fibonacci level) have been providing support for successive weeks on the daily chart.
In the long term, a projected target for USD/CAD wedge pattern would be located near the level of 1.3050 (the origin of the last bearish swing initiated on March 2009).
The current weekly candlestick indicates bearish rejection at retesting of the weekly resistance at 1.3000 (consolidation zone upper limit).
Weekly closure below the price level of 1.2550 (Intraday support level) indicates quick bearish decline again towards 1.2350 (significant Fibonacci level as well as the lower limit of the wedge pattern),
Trading recommendations:
Daily closure below the price level of 1.2550 probably offers a valid SELL entry with T/P at 1.2350. S/L should be set as reclosure again above 1.2560.
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