USD/CAD Price Analysis: Bulls delight on bullish engulfing formation, 1.3500 eyed

• A Bullish Engulfing candlestick formation has concluded the short-term correction.
• Advancing 10-and 20-EMAs add to the upside filters.
• The greenback bulls are set to re-test the two-year high at 1.3420.

The USD/CAD pair is displaying back-and-forth moves in a narrow range of 1.3356-1.3375 in the early Tokyo session. The asset has turned sideways after a vertical upside move from a low of 1.3227, recorded on Tuesday. The major has strengthened ahead of the Federal Reserve (Fed) monetary policy and is marching to recapture a two-year high of around 1.3420.

The formation of a Bullish Engulfing candlestick pattern in which the wide bullish candlestick engulfs the prior bearish candlestick in an uptrend indicates that the mild correction is concluded now and the greenback bulls are gearing up for a fresh bullish impulsive wave. The horizontal support placed from July 14 high at 1.3224 will continue to provide a cushion to the asset.

Advancing 10-and 20-period Exponential Moving Averages (EMAs) at 1.3228 and 1.3155 respectively adds to the upside filters.

Also, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-480.00, which indicates a perpendicular upside move ahead.

A decisive break above Tuesday’s high at 1.3375 will trigger the Bearish Engulfing formation and will activate the greenback bulls for further upside towards a two-year high of around 1.3420. A breach of the latter will unleash bulls for a rally towards the psychological resistance of 1.3500.

On the flip side, a slippage below the plotted support at 1.3224 will drag the asset towards the 20-EMA at 1.3155, followed by June 17 high at 1.3079.

USD/CAD daily chart