USDCAD Dips As Descending Channel Highlights Bearish Bias
USDCAD sailed to a 37-and-a-half-month low; However, the pair’s negative momentum appears to be losing momentum, respecting the existing support area between the barriers of 1.2255 and 1.2195. Nonetheless, the sliding Simple Moving Averages (SMAs) confirm the negative trajectory and, along with the Ichimoku Cloud, continue to counter price improvements, confining the pair to the vicinity of the bearish channel.
The Ichimoku lines and the short term oscillators are slightly biased to the downside. That said, negative price dynamics are being tested and this is starting to be reflected in technical indicators. The MACD, in the negative region, is below its red trigger line, while the RSI looks set to bounce off the 30 level. The Stochastic Oscillator is in overbought territory and its% K line has yet to signal of significant decline in bearish momentum.
If the buyers manage to give up some traction on the upper border of the support band at 1.2255, preliminary resistance may start from the area between the inner swing low of 1.2365 and the barrier at 1.2418. . Exceeding this hurdle, the price could then hit the Kijun-sen blue line at 1.2459. Then there would need to be more intense buying interest to conquer the next section of resistance residing between the 50 and 100 day SMAs at 1.2530 and 1.2626, respectively. This area is also fortified by the cloud and the upper limit of the descending channel.
Maintaining a negative roll sellers face immediate regional support between the February 2018 low of 1.2255 and a low of 1.2195. Diving below could point a new multi-year bottom towards the buffer zone of 1.2060-1.2118, reconstituted in September 2017. If the deterioration of the pair persists, the bar of 1.2000 and the low of 1.1919 of May 2015 could become the following support targets.
In conclusion, USDCAD remains trapped in a bearish channel and lasting negative pressures aim to maintain the parity and bearish picture.