- The formation of a Double Top formed a base for a bearish reversal.
- USD/CAD bears are hovering around the 20-EMA while the 50-EMA has already turned downwards.
- A range shift move the RSI (14) into the bearish territory of 20.00-40.00 has strengthened loonie further.
The USD/CAD pair is expected to test its day’s low at 1.3620 and will decline towards the crucial support of 1.3600. For the past week, the asset has remained in the grip of bears after failing to sustain above the critical resistance of 1.3800.
On an hourly scale, the formation of the Double Top chart pattern has weakened the greenback bulls. A formation of the above-mentioned chart pattern indicates a bearish reversal amid lesser buying interest despite aiming to cross the prior high of 1.3833, recorded in the previous week.
At the press time, the asset is hovering around the critical support of the 200-period Exponential Moving Average (EMA) at 1.3624. The breakdown of the same will issue a downside warrant for the mighty greenback. While the 50-EMA at around 1.3700 has turned downwards, which indicates more weakness.
Adding to that, the Relative Strength Index (RSI) (14) has delivered a range shift move from 40.00-60.00 into the bearish range of 20.00-40.00. This dictates an activation of the loonie bulls.
A decisive break below the round-level support placed at 1.3600, which is Wednesday’s low will drag the asset towards the psychological support at 1.3500, followed by September 19 high at 1.3344.
On the flip side, a break above Wednesday’s high at 1.3833 will bolster the asset to hit a fresh two-year high at 1.4000. A breach of the latter will drive the major towards May 2020 high at 1.4173.
USD/CAD hourly chart
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