USD/CAD: Resistance line of downtrend channel suggest to Short
|Overview: - Overall pair has shown too much volatility and headed up towards the north side i.e. 1.4666, the journey was started from 1.3220 level and since then bulls took the control and dominated the bears at every level. The pair was making successively higher highs and higher lows by taking the support of an uptrend line. But after arriving at 1.4666 levels it seems like bulls lost the control from the game and hand over all the control in the bear’s hand, since then pair is moving and trading in Downtrend Channel and making successively lower lows and lower highs.
Technical Analysis:- Coming back to the current scenario we can see that pair is struggling to move upside as it is near to its downtrend line i.e. resistance line of the downtrend channel, which is pushing the pair at the downside. Odds are in favor of bears and our bias remains bearish on the pair as long as 1.4200 level remains unbeatable on a closing basis. The 1.3950 will act as a key support level followed by a very strong breakout level of 1.3850. Also, 1.3850 is the last hope for the bulls, if it breaks then we may see steep downfall i.e. blood bath in the pair. It’s time to sell the pair with a good risk and reward ratio.
Overall pair is trading above all the major and minor EMA line on the daily chart which is providing strength in the pair so it is not going to be easy for bears but pair is trading below all the moving average line the hourly and 2 hourly chart which provides strength to the bears. A short term downtrend line on the RSI has been formed on hourly as well as on the daily chart whereas a bearish crossover on the MACD indicator on the hourly chart is the recent development It’s an early sell call but there is good risk and reward ratio to sell the pair here.
What next:- Today at the time of writing pair is trading at 1.4073 and getting a bid supply pressure in European session. It erased all the positive sentiments of Friday’s trading session.
Trade idea:- Based on the chart and studies above we can suggest to our readers that go for sell around 1.4080 level for the target of 1.3850 level and 1.3500 with the tight stop loss of 1.4250 level on a closing basis.
| Major support levels | Major Resistance Levels |
| 1.3950 | 1.4250 |
| 1.3850 | 1.4340 |
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