Technical Analysis – USDCAD looks for buyers near 1.2440; bears could dominate

USDCAD retreated below the short-term supportive trendline and to a two-week low of 1.2431 on Thursday following the multiple rejections from the 200-day simple moving average (SMA).

The current consolidation area around 1.2440 overlaps with July 9-13’s support region and the 200-period SMA on the four-hour chart. Hence, it could be an ideal pivot point as the Stochastics sink in the oversold territory. Yet, with the price trading some distance away from the lower Bollinger band, the RSI set to explore the bearish zone, and the MACD strengthening its negative momentum below its red signal line, the bears could rule the roost afterall.

If the bearish scenario unfolds, the pair may dip to meet fresh demand near the lower Bollinger band and the 50-day SMA at 1.2330. The surface of the Ichimoku cloud is also located in the same neighborhood, adding extra importance to the region. Breaking that floor too, the former support area around 1.2270 may attempt to catch the fall before the focus turns to the 1.2200 – 1.2130 restrictive zone, and the broken long-term descending trendline.

Should the 1.2440 base stand firm, the price could push for a close above the 20-day SMA (middle Bollinger band) and the short-term trendline around 1.2545. The 200-day SMA is also converging to the same location, while the 23.6% Fibonacci retracement of the 1.4667 – 1.2012 downleg is within breathing distance at 1.2634. Therefore, stronger buying pressures will be needed to knock that wall and bring the 1.2738 resistance and the 1.2800 peak back into view. Beyond the latter, the bulls could pin a new higher high around 1.2880.

As regards the market trend, the bullish cross between the 20- and 50-day SMAs is still defending the upward move from the four-month low of 1.2012. A potential bullish intersection between the 20- and 200-day SMAs could further enhance trend optimism.

Summarizing, USDCAD is expected to trade bearish in the short-term, though the pair could find some footing around 1.2440 before heading lower again.

Latest News

Technical Analysis – EURUSD challenges floor of 2-month trading range

Technical Analysis – Gold shifts northwards but lacks bullish signals

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.