Technical Analysis – USDCAD retains bearish technical picture; more downside seen after brief corrective move
|USDCAD maintains a bearish trend but its downward trajectory has slowed after touching a more than 2-year low of 1.2061 on September 8. The market became overextended as indicated by the RSI oscillator which reached oversold conditions below 30 last week. This suggested that prices were due for a pullback or a consolidation phase in the near term.
The underlying downtrend remains intact as trend indicators are bearish. The 50-day and 200-day moving averages are negatively aligned after a bearish crossover on July 13. MACD – a momentum indicator – is bearish as it is below zero and falling. The odds for another leg lower are high.
Immediate support is expected at 1.2061 (September 8 low). This level was last seen in May 2015 and a break below this would trigger another move down to the next low at 1.1919.
The spike to 1.2238 yesterday was very brief and prices are heading lower again today, possibly indicating that the corrective move has ended. To confirm a lower top is in place USDCAD has to move below 1.2061 to see a resumption of the longer-term downtrend.
Only a move above 1.3000 would shift focus to the upside. For now, there are no signs of a reversal in the bearish trend. The risk is strongly to the downside based on trend and momentum signals. The small correction off 1.2061 suggests USDCAD is likely pausing ahead of another push lower.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.