After the Bank of Canada rate announcement yesterday USD/CAD sharply moved up with a little over than 90 pips and today it continued climbing while at the same time it headed towards the resistance trendline of the overall move to the downside that began from 1.31474 (since 1st September 2016), which it hadn’t tested up until now.
Unsurprisingly, the pair reached the trendline at 1.29349, after which it retraced all the way to 1.28625, which was practically below 61.8% Fibo of the entire move to the upside today.
At the moment the pair is being traded around its highest levels for the day, but since this is a correction and on one side the American session is about to end, on the other - there is a doji bar at 1.29193 on the 30-minute time frame - I think that during the Asian session we’ll see another corrective drop. It’s difficult to make a proper prognosis about how the pair will move tomorrow, because on the 1-hour time frame there is an impressive hammer bar which generally is a signal for a move to the upside.
If this scenario is valid, then the pair should break above the trendline and continue climbing.
In the alternate scenario we can expect a drop towards the support at 1.28800 and then towards 1.28200.