USD/CAD Price Analysis: Bulls ready to break three-week-long consolidation

• Bulls are set to break the consolidation of the previous 18 trading sessions.
• The bullish crossover of 50 and 200 EMAs backs the upside potential.
• The RSI (14) needs to breach 60.00 to strengthen the buying momentum.

The USD/CAD pair has eased its gains on Wednesday after attracting some significant offers around 1.2780. The loonie has been oscillating in a range of 1.2636-1.2796 since January 28.

On a four-hour scale, USD/CAD has been forming a bullish pennant pattern, which signals a consolidation phase followed by a strong upside and leads to a solid bullish performance in the coming episodes. Usually, the consolidation phase denotes the placement of bids by investors who fail to enter in the initial rally or those investors placing bids, who prefer to enter in an auction after the establishment of an upside bias.

The Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, hinting at a consolidation. However, a breach above 60.00 may strengthen the bulls for a juggernaut rally.

There is a bullish crossover from 50-period and 200-period Exponential Moving Averages (EMA), which adds to the upside filters.

Bulls are now eyeing Tuesday’s high at 1.2782, as overstepping the same will push USD/CAD towards the January 28 high at 1.2796, followed by January 06 high at 1.2813.

On the flip side, bears may recapture the grip on loonie if it slips below Friday’s low at 1.2673. Then, the major can go further south towards February 10 low at 1.2636 and December 08 low at 1.2606.

USD/CAD four-hour chart