USD/CAD Price Analysis: Refreshes multi-month lows, challenges descending channel support

A combination of factors prompted fresh selling around USD/CAD on Tuesday.
The downfall has now dragged the pair to descending trend-channel support.
Slightly oversold conditions warrant caution before placing fresh bearish bets.

Haresh Menghani FXStreet

The USD/CAD pair continued losing ground through the first half of the European session and fell to the 1.2320 region, or over three-month lows in the last hour.

The dominant risk-on mood in the financial markets prompted aggressive selling around the safe-haven US dollar, which fell to three-week lows on Tuesday. Conversely, a fresh leg up in crude oil prices underpinned the commodity-linked loonie and exerted some downward pressure on the USD/CAD pair.

From a technical perspective, the pair has been trending lower along a downward sloping channel from September monthly swing highs, around the 1.2900 mark. Bearish trades might now wait for a sustained break through the channel support before placing fresh bets amid near-term oversold conditions.

A convincing break below the trend-channel support, currently around the 1.2325 region, will set the stage for an extension of the depreciating move. The USD/CAD pair might then turn vulnerable to break below the 1.2300 mark and accelerate the slide towards the next relevant support near mid-1.2200s.

On the flip side, any attempted recovery move might now confront immediate resistance near the 1.2370-75 region. This is closely followed by the overnight swing highs, around the 1.2400-1.2410 area, which if cleared decisively might trigger a near-term short-covering move around the USD/CAD pair.

That said, any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the key 1.2500 psychological mark. The latter represents a confluence barrier comprising of the very important 200-day SMA and the top end of the mentioned channel.

USD/CAD daily chart

Technical levels to watch

USD/CAD

Overview
Today last price	1.232
Today Daily Change	-0.0060
Today Daily Change %	-0.48
Today daily open	1.238

Trends
Daily SMA20	1.258
Daily SMA50	1.2614
Daily SMA100	1.2504
Daily SMA200	1.2505

Levels
Previous Daily High	1.241
Previous Daily Low	1.2349
Previous Weekly High	1.2498
Previous Weekly Low	1.2337
Previous Monthly High	1.2896
Previous Monthly Low	1.2494
Daily Fibonacci 38.2%	1.2387
Daily Fibonacci 61.8%	1.2372
Daily Pivot Point S1	1.2349
Daily Pivot Point S2	1.2318
Daily Pivot Point S3	1.2288
Daily Pivot Point R1	1.241
Daily Pivot Point R2	1.2441
Daily Pivot Point R3	1.2471

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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