USD/CAD Price Analysis: Back above 1.27, daily RSI teases bullish divergence

• USD/CAD’s daily RSI has diverged in favor of the bulls. 
• An oversold bounce to Monday’s high may be seen.

USD/CAD is currently trading near 1.2705, having printed a low of 1.2688 during the overnight trade. 

The 14-day Relative Strength Index (RSI) has produced higher lows in the below-30 or oversold region this month, contradicting lower lows on the price chart. That bullish divergence indicates a potential for a corrective bounce. 

The immediate resistance is seen at 1.2790 (Monday’s high), followed by 1.2837 (the upper end of the daily chart falling wedge). A close higher would confirm a bearish-to-bullish trend change. 

Support is located at 1.2688 (overnight low) and 1.2654 (June 2016 low). 

Daily chart

Trend: Bounce likely

Technical levels