USDCAD is resting on the 200-period simple moving average (SMA) around 1.2125 following the deflection off the roof of a sideways market that has lasted for around a month. Nonetheless, the 50- and 100-period SMAs are gradually improving and should they cross above the 200-period SMA, this could be a positive sign for the pair.
That said, the flattening blue Kijun-sen line is confirming the lack of force in the latest positive impetus, which resulted in the pair failing to recoup extra ground. The short-term oscillators are currently suggesting positive momentum is feeble. The MACD, far above the zero mark, has dipped below its red trigger line, while the RSI is gliding towards the 50 threshold. The stochastic oscillator is retaining a negative charge near its 20 level and has yet to signal any pickup in positive pressures.
If the price forms traction off the 200-period SMA at 1.2125, early upside limitations could arise from the red Tenkan-sen line at 1.2149 ahead of the 1.2178-1.2202 barrier. Overcoming this boundary could propel the price towards the resistance belt of 1.2251-1.2270. Conquering this too could raise optimism, with buyers likely heading next to challenge the vital buffer zone of 1.2351-1.2391.
Otherwise, an immediate cluster of support from the 200-period SMA at 1.2125 until the 50-period SMA at 1.2106 could test sellers’ efforts to steer the price back down. Not far below is the 100-period SMA at 1.2086 and the Ichimoku cloud followed by a nearby low at 1.2056. Diving from here, sellers may then revisit the foundation of 1.1980-1.2012, a zone encapsulating the 6-year lows and the 1.2000 handle. Sinking further, the price may aim for the 1.1933 low, identified in January 2015.
In conclusion, USDCAD’s neutral-to-bearish tone is expected to remain intact should bullish price action fail to sustain a decisive climb past 1.2178-1.2202.
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