USD/CAD edged south after it hit resistance near 1.3288 yesterday. That said, although the move confirmed a lower high, the pair has yet to confirm a forthcoming lower low. Since September 16th, it has been trading in an indecisive mode between 1.3235 and 1.3310 and thus, we will adopt a wait-and-see stance for now.
In order to start examining whether the bears have taken the reins, we would like to see a clear dip below the lower end of the aforementioned range. Such a move would confirm a forthcoming lower low on the 4-hour chart and may initially pave the way towards the low of September 16th, at around 1.3210. If that low fails to halt the slide, its break may set the stage for larger bearish extensions, perhaps towards the 1.3180 zone, which is fractionally above the low of September 12th.
Our short-term oscillators suggest a lack of directional momentum, which enhances our choice to stay sidelined and wait for the pair to escape the pre-discussed sideways range. The RSI stands fractionally below 50, but just ticked up, while the MACD lies near both its zero and trigger lines, pointing sideways.
On the upside, we would like to see a strong recovery above 1.3310, the upper bound of the range, before we assess whether the outlook has turned to a more positive one. The bulls may then get encouraged to push towards the 1.3340 zone, near the high of September 4th, the break of which may allow extensions towards the peak of the day before, at around 1.3383.
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