USD/CAD has been bouncing above the 2/8 Murray located at 1.2573. We can see that it is consolidating above the 21 SMA located at 1.2595. A move higher is likely in the coming hours and the pair may reach the zone 4/8 Murray located at 1.2695.
On the 4-hour chart, we can also see a downtrend channel that has been formed since March 17, which keeps the price consolidating. It is likely that a sharp break above this channel around 1.2600 could confirm the upward move.
Conversely, a move lower towards the bottom of the downtrend channel around 1.2540 will be an opportunity to buy into the support of a downtrend channel, with targets at 1.2595 and 1.2695.
The rally of oil prices is helping the Canadian dollar assert strength as this currency is linked to commodities. As long as USD/CAD remains above the psychological level of 1.25, there could be a technical bounce in the coming days.
On March 18, the eagle indicator reached the extremely oversold zone around 5-points. So, it is expected that in the next few hours there will be a rebound towards 1.27, level of the 200 EMA.
Our trading plan for the next few hours is to buy the Canadian dollar only if it breaks out and consolidates above the downtrend channel at 1.2600. Conversely, we should wait for a bounce off around the bottom downtrend channel at 1. 2540 to buy with targets at 1.2599 and 1.2714.