Bulls moved in, reaches two-day high as a bullish-engulfing pattern looms

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• Bullish-engulfing candlestick pattern on the daily chart suggests buyers are in control.
• The first major resistance at 1.3600, followed by several key levels up to 1.3804.
• Downside risks include a drop below 1.3489, potentially targeting the 200-DMA at 1.3462 and the 50-DMA at 1.3345.

The Canadian Dollar (CAD) losses ground against the US Dollar (USD) sponsored on weaker than expected Canadian economic growth in the second quarter, alongside a mixed US jobs report and improvements in business activity. Hence, the USD/CAD is trading at 1.3595 after hitting a daily low of 1.3489, above its opening price by 0.65%.

USD/CAD Price Analysis: Technical outlook

The daily chart portrays the pair as neutral to upward biased, though the major reached a lower low at 1.3489, slightly below the August 8 daily high at 1.3502. However, the USD/CAD recovery was outstanding, forming a bullish-engulfing candlestick chart pattern, which engulfed the price action of the previous two days. Hence, buyers are in charge.

The USD/CAD first resistance would be the 1.3600 figure. A breach of the latter will expose the August 25 high at 1.3640, closely followed by the May 26 swing high at 1.3654 and the April 28 high at 1.3667. Once those levels are cleared, the 1.3700 figure would be up next before rallying towards the March 24 daily high at 1.3804.

Conversely, if the USD/CAD drops below 1.3489, the pair could shift downwards and extend its losses toward the 200-day Moving Average (DMA) at 1.3462. Once cleared, the next stop would be the psychological 1.3400 area, and up next, the 50-DMA at 1.3345.

USD/CAD Price Action – Hourly chart