• USDCAD edges higher today, approaches recent highs

• Geopolitical developments impact sentiment across the board

• The momentum indicators complicate the outlook

USDCAD is moving higher today, recording its third positive candle and trading a tad above the 1.3704 level. It has been an aggressive upleg since the July 14 low and, despite the correction seen in September, the bullish series of higher highs and higher lows remains firmly in place.

Amidst this price action, the momentum indicators are only somewhat on the bulls‘ side. The RSI continues to hover above its midpoint, and the Average Directional Movement Index (ADX) is probably making its first baby steps towards pointing to a weak bullish trend in the market. Interestingly, the stochastic oscillator has crossed above its moving average, but it appears to lack the strength for a sizeable upward move.

Should the bulls remain in control of the market, they could try to keep USDCAD above the December 16, 2022 high at 1.3704. They could then have a go at overcoming the October 4 peak and test the resistance set by the 1.3807-1.3854 area. If successful, they could have the chance to record a new 2023 high and potentially set their course for the October 13, 2022 peak at 1.3977.

On the flip side, the bears are probably interested in stopping the current rally by firstly pushing USDCAD below the 1.3704 level. They could then stage a sell-off towards the 1.3572-1.3605 region that is defined by the 23.6% Fibonacci retracement of the April 5, 2022 – October 13, 2022 uptrend and the 50-day simple moving average (SMA). Lower, the support could probably be stronger as the July 14, 2023 ascending trendline would come into play.

To sum up, USDCAD bulls are in control and targeting the recent higher high as the bears are trying to limit their losses and hoping for some support from the momentum indicators.