Monday had the US dollar surge more than 200 points vs. the Canadian dollar, or 1.50%, amid exacerbated losses in oil markets. USD/CAD latched onto a healthy bid and overthrew 1.39 and marginally pierced 1.40 on the H4 timeframe. Although the relative strength index (RSI) continues to emphasise bearish divergence and may spark a move back to 1.39, the H4 candles exhibits scope to press as far north as Quasimodo resistance at 1.4082, drawn from February 2nd, 2016.
Meanwhile, further afield on the weekly timeframe we can see price retested the 2016 yearly opening level at 1.3814 as support, and shows potential for moves to a 161.8% Fibonacci extension at 1.4198, followed by the 1.4689 January 18th high, 2016.
The key 1.40 level also represents resistance on the daily timeframe, with a break of this level exposing the 161.8% Fibonacci extension at 1.4198 mentioned above on the weekly timeframe. In the event we turn lower from 1.40, though, daily support forms around 1.3807, located closely by 1.3814 on the weekly timeframe.
The general sense on the weekly timeframe suggests buyers continue to have the upper hand in this market. This may pull on H4 and daily price to break 1.40 today and target a run to H4 Quasimodo resistance underscored above at 1.4082.
As such, a decisive H4 close north of 1.40 today could spur additional upside; breakout traders will likely enter long on the close of the breakout candle, with others possibly waiting and seeing if a retest occurs before committing.
Disclaimer: The information contained in this material is intended for general advice only.