Technical Analysis – USDCAD bears reverse below 200-day SMA and 50.0% Fibonacci


Anthony Charalambous, XM Investment Research Desk

USDCAD trades between the converging simple moving averages (SMAs) with the sellers attempting to move underneath the 50-day SMA, after a deflection off the upper band of a two-month trading range.

The signals from the tangled SMAs are indistinct. However, the MACD, although marginally above its red trigger line in the positive zone, looks to cross beneath it, while the RSI is flirting with the uptrend line, which has presently merged with the neutral 50 mark. Despite a near term negative demeanor, the momentum indicators are still in the bullish region’s and traders need to be cautious in case the bull’s pick-up.

If the bears breach the 50-day SMA, next support could come between the 100-day SMA currently around 1.3240 and the 1.3205 mark, where the 38.2% Fibonacci retracement of the down leg from 1.3564 to 1.3015 is placed too. Lower, the bottom of the range at 1.3145 could follow. If the selling persists, the 1.3100 barrier could stop the fall before the bears encounter the 1.3068 support and uptrend line.

Otherwise, if the bulls manage to pivot the price above the 50.0% Fibo of 1.3290, a more durable resistance region around 1.3345 could apply significant downside pressure as this is a level tested on multiple occasions since August 8. Next, if the close peak of 1.3382 surrenders to the bulls, the swing high of 1.3435 could be the next target.

In brief, the short-term bias is neutral-to-bearish. Yet, a break above 1.3345 or below 1.3145 would determine the directional bias.