Technical Analysis – USDCAD’s negative bias struggles near multi-year floor  


Anthony Charalambous, XM Investment Research Desk

USDCAD is finding difficulty in returning under the lower Bollinger band around 1.2949, despite the picture remaining largely to the downside. The simple moving averages (SMAs) are maintaining their controlling bearish demeanour, while conflicting signals in near-term momentum are exhibited within the short-term oscillators.

The MACD, in the negative region, has stepped marginally above its red signal line, while the RSI is pointing lower in bearish territory. That said, the gloomy tone of the stochastic oscillator is endorsing further losses in price. Worth mentioning is the squeeze in the Bollinger bands, suggesting a forthcoming aggressive directional move in the pair.

Steering the price downwards, instant limitations may commence from the lower Bollinger band at 1.2949 ahead of the support base of 1.2915-1.2927, which includes multi-month lows. If sellers manage to direct the price below this toughened floor, the bears may meet some defence from the 1.2886 barrier from August of 2018, and the 1.2856 neighbouring level. Sinking deeper, the price may next encounter support from the October 2018 trough of 1.2782.

Otherwise, initial upside obstructions may arise from the mid-Bollinger band at 1.2987 ahead of the resistance section of 1.3009-1.3028. Successfully driving the price over this trench, which contains the 50-period SMA and the upper Bollinger band, buyers may then encounter early upside constraints from the 100-period SMA at 1.3046. Should the 100-period SMA fail to impede further advances, the pair may stretch towards the 1.3090 high and ultimately have chances to challenge the 1.3112-1.3124 resistance section, which encompasses the 200-period SMA.

Summarizing, a bearish outlook overpowers the pair. Yet, the short-term picture seems to be confined between a foundation of 1.2915-1.2927 and a ceiling of 1.3170-1.3177. Navigating below or above these boundaries could reveal a clear price course.