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FXstreet.com (San Francisco) - Little of interest has happened for the USD/CAD pair this Monday besides choppy consolidative price action between 1.0182 and 1.0220, last at 1.0200 vs. 1.0185 past Friday.

In the larger timeframes, the market pulled back into the 50% Fibonacci support zone of the May rally from 0.9798 and 1.0444; the selloff stalled in the 1.01 area and has since bounced back to current prices amid a test of the mentioned retracement support point.

Analysts at TD Securities observe that the market remains operating in a downward channel, and a bull flag breakout pattern has formed:

"After rebounding from the 200-day MA last week, we tend to think that USD/CAD is still consolidating the sharp rally seen in May," writes TD Securities. "With the USD rebounding strongly last Thursday (key reversal day), we consider the correction of the May rally complete. We have redrawn the boundaries of the downward channel in place since early June and consider this a possible bull flag formation."

As a general rule in technical analysis, the flag formation is a continuation pattern which suggests that, in the instance of a bullish trending USD/CAD, a break out above the 1.0325/30 area would open scope for further rallies.

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