- USD/CAD tumbles nearly 500 pips intraday before finding some support near mid-1.4100s.
- The technical set-up support prospects for further downside and warrants caution for bulls.
The USD/CAD pair extended the previous day's pullback from multi-year tops and witnessed some aggressive long-unwinding trade on Friday. A sustained break below the 23.6% Fibonacci level of the 1.3518-1.4668 upsurge was seen as a key trigger for bearish traders and led to an intraday slump of nearly 500 pips amid extremely overbought conditions on short/medium-term charts.
Meanwhile, the downfall showed some resilience below 50% Fibo. level, helping the pair to find decent support near mid-1.4100s and recovery around 200 pips from daily swing lows. Meanwhile, the intraday bounce struggled to find acceptance back above 100-hour SMA, which currently stands near the 1.4285 region and should now act a key pivotal point for intraday traders.
Technical indicators on hourly charts have been gaining strong momentum on the downside and are still holding in the overbought territory on the daily chart. The set-up warrants some caution for bullish traders and support prospects for a further near-term pullback. Hence, some follow-through weakness, back towards challenging the daily swing lows, now looks a distinct possibility.
On the flip side, sustained move beyond the mentioned hurdle should assist the pair to surpass the mid-European session swing high resistance, near the 1.4345 region, and aim towards reclaiming the 1.4400 round-figure mark. The latter coincides with 23.6% Fibo. level, which if cleared decisively, might now set the stage for the resumption of the pair's recent strong bullish trajectory.
USD/CAD 1-hourly chart
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Technical levels to watch
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