USD/CAD plummets below crucial trendline [Video]

USDCAD posts a fresh 2½-month low in today’s session.
Decline shows no signs of easing after break below 200-day SMA.
Momentum indicators are pointing at an overstretched retreat.

Stefanos Oikonomidis XM

USDCAD has been constantly losing ground following its 13-month high of 1.3898 on November 11. Moreover, the pair dropped to its lowest levels in more than two months on Friday, with the bears pushing the price below the crucial ascending trendline that connects a series of higher lows since October 2022.

Should the selloff persist, the September low of 1.3377 could be the first barricade for the price to claim. A violation of that territory could open the door for the April bottom of 1.3300. Failing to halt there, the pair could extend its retreat towards the February low of 1.3262.

On the flipside, if the price reverses higher, the bulls might attack the December support of 1.3479, which could serve as resistance in the future. Surpassing that zone, the pair could face 1.3618, a region that held strong multiple times in December. Further advances may then cease at the April-May resistance of 1.3653.

In brief, USDCAD has been under increasing downside pressures lately, generating a structure of consecutive lower lows. However, traders should not rule out an impending rebound as the short-term oscillators are currently within their oversold zones.

Author

Stefanos Oikonomidis

Stefanos joined XM as a Junior Investment Analyst in September 2021. He conducts daily market research on the currency, commodity and equity markets, from a fundamental and a technical perspective.

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