USD/CAD technical analysis: Drops to two-week lows after a downside break of rising trendline

USD/CAD hits two-week lows a day after breaching key rising trendline to the downside.
The daily chart indicators have turned bearish and the candlestick arrangement is signaling a bearish reversal.

Omkar Godbole FXStreet Contributor

USD/CAD is currently trading at 1.3241, the lowest level since Aug. 14, and could slide further during the day ahead, having dived out of a trendline connecting the July 19 and Aug. 13 lows on Monday.

The downside break of the rising trendline is also backed by the moving average convergence divergence histogram's bearish turn (drop below zero).

Further, the 14-day relative strength index (RSI) is teasing a drop into the bearish territory below 50 and the 5- and 10-day moving averages (MAs) have produced a bearish crossover.

Also, the pair fell 0.22% on Monday, validating the bullish exhaustion signaled by pair's repeated failure near 1.3340 seen in the two weeks to Aug. 23. Essentially, Monday's drop confirmed the bearish reversal, that, is the rally from July lows near 1.30 has ended and the bears have regained control.

All-in-all, the path of least resistance is to the downside and a daily close above 1.3040 is needed to revive the bullish view.

Daily chart

Trend: Bearish

Pivot points

1. R3 1.3375
2. R2 1.3348
3. R1 1.3301
PP 1.3274
1. S1 1.3227
2. S2 1.32
3. S3 1.3154

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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