USDCAD’s two-week decline from 1.2774 is currently testing the support base of 1.2422-1.2433 that has withstood downside pressures from early July. The simple moving averages (SMAs) are validating the pair’s plunging trajectory and the recent bearish crossover of the 200-period SMA by the 100-period one could further boost the descent.
The Ichimoku lines are indicating a pause in downward forces, while the short-term oscillators are demonstrating that bearish momentum is escalating again. The MACD some distance below zero is looking set to push back below its red trigger line, while the RSI is putting strain on the 30 oversold level. The stochastic oscillator has retained its negative charge and is promoting additional selling in the pair.
If sellers remain in control, prompt downside limitations could stem from the 1.2422-1.2433 support belt. Should this barricade fail to halt the decline from extending lower, the price may meet the 1.2371 barrier before plunging towards the July 6 trough of 1.2300. If the bears stay in the driver’s seat, they could then target the 1.2251-1.2271 support band.
To the upside, if the price finds some traction off the 1.2422-1.2433 base, initial hindrance may commence at the red Tenkan-sen line at 1.2466 ahead of the resistance zone of 1.2498-1.2518. Conquering the latter obstacle, which is also overlapped by a minor tentative downtrend line pulled from the 1.2774 high, the bulls could jump to challenge the Ichimoku cloud’s lower band and the resistance section of 1.2544-1.2568. If buying interest intensifies and the price floats above the 1.2600 handle and the cloud, the pair could encounter next resistance in the region between the 100-period SMA at 1.2630 and the 1.2647 high.
Summarizing, USDCAD is emanating a strong bearish tone. Sellers could dominate with a break below 1.2422, while a climb in the price above 1.2600 and the cloud is necessary to boost bullish confidence.
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