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Technical Analysis – USDCAD may enter a new bearish phase

Technical Analysis – USDCAD may enter a new bearish phase

USDCAD dipped below the November support line, raising worries that selling pressures may strengthen.

The bearish breakout is still being studied, as the price is still hovering nearby. The RSI and MACD, however, remain bearish, playing down any price increases in the immediate term.

In other warning signals, the 50- and 200-day SMAs have posted a death cross, indicating a potential worsening of the market trend. The 20-day SMA has also slid below longer-term SMAs.

Should sellers push the market below the 23.6% Fibonacci retracement of the 1.4667-1.2007 downleg of 1.3340 and the aforementioned support line, the price may ease towards the 1.3225 key base, where it pivoted last July and November. A clear step lower would downgrade the long-term picture from bullish to neutral, pressing the pair towards the 1.3135 barrier and then inside the 1.3075-1.3028 zone where the 38.2% Fibonacci mark is placed.

If the price crawls back above the weekly resistance of 1.3370, the 20-day SMA could initially add some downside pressure ahead of the 50-day SMA. A continuation above the 200-day SMA at 1.3516 could bolster buying appetite, lifting the pair probably towards the 1.3650 bar.

In brief, USDCAD is at risk of tumbling lower following the drop below 1.3340. The 1.3225 region might be the next destination.   

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