USD/CAD Price Analysis: Positive Divergence bolsters a bullish reversal, 1.3000 eyed

• The greenback bulls are facing barricades at the downward sloping trendline placed from 1.3079.
• A Positive Divergence signals resumption in the dominant trend after a corrective move.
• The RSI (14) is oscillating in a 40.00-60.00 range which indicates a consolidation ahead.

The USD/CAD pair is displaying back and forth moves in a narrow range of 1.2910-1.2922 in the early Tokyo session. Earlier, the greenback bulls witnessed a corrective move after failing to sustain above the 1.3050 on Friday.

On an hourly scale, the major has displayed a Positive Divergence, which indicates a resumption of an uptrend after a corrective move. A Positive Divergence was recorded after the asset made a higher low at around 1.2907 while the momentum oscillator Relative Strength Index (RSI) (14) made a lower low. This dictates an oversold situation in an uptrend which is considered a bargain buy for the market participants. The dotted downward sloping trendline placed from Friday’s high at 1.3079 will act as a major hurdle going forward.

The major is auctioning between the 50- and 200-period Exponential Moving Averages (EMAs) at 1.2952 and 1.2895 respectively, which signals a consolidation ahead.

A decisive move above the 50-period EMA at 1.2952 will trigger the Positive Divergence and eventually will active the greenback bulls for an upside move towards the psychological resistance and Friday’s high at 1.3000 and 1.3079 respectively.

Alternatively, the Positive Divergence formation could negate if the asset drops below Thursday’s low at 1.2861. This will drag the asset towards June 10 high at 1.2813, followed by May 23 low at 1.2766.

USD/CAD hourly chart