Technical Analysis – USDCAD’s advances capped by Ichimoku cloud

Anthony Charalambous, XM Investment Research Desk

USDCAD is somewhat consolidating around the 50-day simple moving average (SMA) at 1.2776, as the pair’s efforts to improve are being curbed by the Ichimoku cloud. The Ichimoku lines are reflecting the price’s struggle to gain ground and it appears its bearish demeanour may be bulletproofed by the downward sloping SMAs.

Positive momentum in the short-term oscillators seems to be faltering, increasing odds to the downside. The MACD, marginally above its red trigger line has barely peeped above the zero threshold, while the RSI is finding difficulty in maintaining gains over the 50 level. Nevertheless, the stochastic oscillator retains a negative bearing, promoting further fading in the price.

In the event that advances collapse, the pair may tackle instant support commencing from the 50-day SMA at 1.2776 until the blue Kijun-sen line at 1.2733 ahead of the 1.2684 low. Sliding further, sellers could test the support bottom of 1.2588-1.2624, which also involves a 33-month low. Should the negative trajectory resume, the pair may then target the 1.2527 and 1.2450 troughs identified in April and February of 2018 respectively.

However, if buyers retake control and push off the 50-day SMA at 1.2776, quick resistance may be met at the cloud’s lower surface and the 1.2880 barrier. Creeping higher, the bulls may face constrictions from the 1.2955 high and the adjacent 100-day SMA at 1.2975. If price overtakes the 100-day SMA, it could then challenge the 1.3033 boundary, in-line with the cloud’s upper band.

Summarizing, persisting strong bearish restraints continue to control USDCAD. Risks remain to the downside below the limiting cloud, the 1.2955 high and the SMAs.