USD/CAD Technical Analysis: Consolidates in a range around 200-DMA

• USD/CAD regains traction but remains confined in a broader trading range.
• The set-up warrants some caution for bullish traders amid rallying oil prices.

The USD/CAD pair managed to regain some positive traction on Monday, albeit remained well within 70-75 pips trading range held over the past two weeks.

The recent range-bound price action around the very important 200-day SMA constituted towards the formation of a rectangle pattern on the daily chart.

Given the pair's recent rally of around 250 pips from late-October lows, the rectangle might still be categorized as a bullish continuation pattern that marks a pause in the trend.

Meanwhile, technical indicators on the daily chart have managed to hold comfortably in the positive territory and support prospects for an eventual bullish breakthrough the mentioned barrier.

However, the fact that the pair has repeatedly failed to make it through a near six-month-old descending trend-line warrants some cautions before placing any aggressive bullish bets.

Hence, it will be prudent to wait for a sustained strength beyond the trend-line resistance before positioning for a further appreciating move amid rallying crude oil prices.

A convincing breakthrough the hurdle will set the stage for a move towards October monthly swing highs, around mid-1.3300s en-route the 1.3380-85 resistance and the 1.3400 handle.

On the flip side, any meaningful pullback might continue to show some resilience below the 200-DMA and attract some dip-buying near the 1.3260 region.

Failure to defend the latter might negate the positive bias and prompt some technical selling, which might then turn the pair vulnerable to slide towards the 1.3200 mark.

USD/CAD daily chart