USD/CAD technical analysis: Plunges as descending channel highlights bearish bias
USDCAD has navigated to a 37½-month low; however, the pair’s negative momentum seems to be losing pace, respecting the support zone existing between the barriers of 1.2255 and 1.2195. Nonetheless, the gliding simple moving averages (SMAs) are affirming the negative trajectory, and together with the Ichimoku cloud continue to counter price improvements, confining the pair to the vicinity of the bearish channel.
The Ichimoku lines and the short-term oscillators are slightly skewed to the downside. That said, price’s negative momentum is being tested and this is starting to be reflected in the technical indicators. The MACD, in the negative region, is below its red trigger line, while the RSI looks set to bounce off the 30 level. The stochastic oscillator is in overbought territory and its %K line has yet to signal any significant waning in bearish momentum.
If buyers manage to yield some traction off the support band’s upper frontier at 1.2255, preliminary resistance may commence from the zone between the 1.2365 inside swing low and the 1.2418 barrier. Overstepping this obstacle, the price could then meet the blue Kijun-sen line at 1.2459. Next, mustering more intense buying interest would be needed to conquer the next resistance section residing between the 50- and the 100-day SMAs at 1.2530 and 1.2626, respectively. This area is also fortified by the cloud and the upper boundary of the falling channel.
Sustaining a negative bearing, sellers face immediate support from the area between the February 2018 trough of 1.2255 and a low of 1.2195. Diving beneath this could direct a fresh multi-year bottom towards the buffer zone of 1.2060-1.2118, shaped back in September 2017. Should the pair’s deterioration persist, the 1.2000 mark and 1.1919 trough from May 2015 could become the succeeding support targets.
Concluding, USDCAD remains imprisoned within a bearish channel and lasting negative pressures aim to keep the pair’s bearing and picture bearish.
Author
Anthony Charalambous joined XM in 2019 and specializes in preparing daily technical analysis, using his years of trading experience to provide detailed forecasting for all major asset classes such as forex, indices, commodities and equities.
