USD/CAD: Bears smashed 1.3850 level, a clear cut breakout

Overview: - Overall pair is making successively lower lows and lower highs on day to day basis and heading south side. Yesterday bears smashed the 1.3850 level which was the key support level and now we got the clear cut breakout. Also, in our previous report on May 18, 2020 also we mentioned to short the USDCAD at 1.4080 level and our target was 1.3850 which was achieved so we are expecting that our readers have made profit from this move, even we also mentioned that add your sell position below 1.3850 level. Here is the link you can see: USD/CAD: Resistance line of downtrend channel suggest to Short.

Technical Analysis:-  From technical prospective we can see that the pair is moving and trading in Downtrend Channel and making successively lower lows and lower highs. Yesterday we have got a major breakout of the very strong support level which is pushing the pair at the downside and opening the gates for 1.3500 level at least.  Odds are in favor of bears and our bias remains bearish on the pair as long as 1.4050 level remains unbeatable on a closing basis. The 1.3650 will act as a key support level followed by a very strong support level of 1.3500 on contrary, the 1.3980 level is key resistance level followed by 1.4050 level.

Overall pair is trading below all the major and minor EMA line on the daily chart which is providing 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 of the zero line  on the MACD indicator at daily chart is the recent development It’s an clear sell call with low risk and good risk and reward ratio are applicable as we can see the momentum is with the bears. The primary as well as secondary trend is down so in an downtrend market sell on highs will be profitable strategy.

What next:-  Today at the time of writing pair is trading at 1.3775 and getting supply pressure in European session. The first phase has been ended up now it’s starting of the second phase where 1.3500 and 1.3350 are the most likely target which is on the cards.

Trade idea:- Based on the chart and studies above we can suggest to our readers that go for sell around 1.3780-90 level for the target of 1.3550 level and 1.3350 with the tight stop loss of 1.4050 level on a closing basis.