Technical Analysis – USDCAD hopes for a new bullish correction
July 28, 2023 8:25 am
USDCAD has been in a range for the second consecutive week, unable to extend its rebound off a nine-month low of 1.3115 above the nearby resistance of 1.3225.
The odds for a bullish extension are increasing, given the positive slope in the momentum indicators. But with the RSI fluctuating below 50 and the MACD remaining within the negative zone, any improvement may be brief.
If the price sustains today’s bullish move above the 20-day SMA and 1.3225, the falling 50-day simple moving average (SMA) could first halt upside pressures at around 1.3300. Then, the 1.3040-1.3080 constraining zone, which encapsulates the former support trendline, the 50% Fibonacci retracement level of the 2020-2021 downtrend, and July’s high, could delay an extension towards the 200-day SMA at 1.3455. Yet only a sustainable close above the broad bearish channel and beyond 1.3500 would brighten the short-term outlook.
Alternatively, a pullback could re-examine the strong 1.3100-1.3145 support area, where the ascending trendline from May 2021 is positioned. If they break that base, the bears could immediately target the channel’s lower boundary, which coincides with the 38.2% Fibonacci mark and the flatter tentative ascending trendline from May 2021 at 1.3028. Should downside forces strengthen below the 1.3000 psychological level, the price might seek shelter at around 1.2900.
To sum up, USDCAD has been stubbornly pushing for a close above 1.3225 despite its unsuccessful attempts. If it breaches that bar this time, the pair could enjoy some recovery, though it will need stronger buying confidence to cross above the tough 1.3300-1.3380 resistance area.
USDCAD has been in a range for the second consecutive week, unable to extend its rebound off a nine-month low of 1.3115 above the nearby resistance of 1.3225.
The odds for a bullish extension are increasing, given the positive slope in the momentum indicators. But with the RSI fluctuating below 50 and the MACD remaining within the negative zone, any improvement may be brief.
If the price sustains today’s bullish move above the 20-day SMA and 1.3225, the falling 50-day simple moving average (SMA) could first halt upside pressures at around 1.3300. Then, the 1.3040-1.3080 constraining zone, which encapsulates the former support trendline, the 50% Fibonacci retracement level of the 2020-2021 downtrend, and July’s high, could delay an extension towards the 200-day SMA at 1.3455. Yet only a sustainable close above the broad bearish channel and beyond 1.3500 would brighten the short-term outlook.
Alternatively, a pullback could re-examine the strong 1.3100-1.3145 support area, where the ascending trendline from May 2021 is positioned. If they break that base, the bears could immediately target the channel’s lower boundary, which coincides with the 38.2% Fibonacci mark and the flatter tentative ascending trendline from May 2021 at 1.3028. Should downside forces strengthen below the 1.3000 psychological level, the price might seek shelter at around 1.2900.
To sum up, USDCAD has been stubbornly pushing for a close above 1.3225 despite its unsuccessful attempts. If it breaches that bar this time, the pair could enjoy some recovery, though it will need stronger buying confidence to cross above the tough 1.3300-1.3380 resistance area.
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