USDCAD: Candles Warn Rebound Over

Technical Bias: Neutral

Key Takeaways

• Canadian dollar fell against the US dollar post BOC interest rate decision to trade as high as 1.0791.
• Despite the dovish statement published by the Bank of Canada, the Canadian dollar managed to gain ground later.
• USDCAD support seen at 1.0700 and resistance ahead at 1.0790.

The US dollar continued to rise against the Canadian dollar Intraday, but it looks like that the USDCAD pair failed right around an important resistance area which suggests an end of the recent bullish trend.

Correction Complete?

There is an important bearish trend line formed on the 4 hour timeframe for the USDCAD pair, which acted as a barrier for the pair on a couple of occasions. However, the most critical point was that the trend line also coincided with the 50% Fibonacci retracement level of the last drop from the 1.0959 high to 1.0620 low. The USDCAD pair post the news release climbed towards the 50% fib level, failed to gain momentum above the same and fell sharply. Moreover, the pair also failed to close above the 200 simple moving average (4H), which adds to the theory that the pair might have completed the current wave sequence and could move lower again. However, this can only be considered as valid if the pair breaks the 100 SMA (4H) and settles below it. If the pair manages to climb higher again, then it might face resistance around the 200 SMA (4H), followed by the same pivot area at 1.0780-90. A break above the mentioned levels could lead the pair towards the 1.0900 resistance area.



On the downside, the most important support area can be seen around a critical confluence area of 100 and 50 SMA (4H), which could act as a barrier for the US dollar sellers in the short term. So, as long as the pair respects the mentioned confluence area more upside cannot be denied.