USD/CAD erases rally; set to post red week after two positive sessions.
USD/CAD reversed back some of the previous week’s gains, creating a significant red day on Thursday after the bounce off the one-year high of 1.3385. The sharp sell-off has not shifted yet the positive medium-term outlook to negative as it is still developing above the ascending trend line. The technical indicators, though are sending bearish signals in the near-term, suggesting that the strong bullish bias is over.
Looking at momentum oscillators on the daily chart, they suggest further declines may be on the cards in the short-term. The RSI is below the 70 line, detecting negative momentum, and is also pointing downwards. The MACD, already negative, lies below its trigger line.
In case of further declines in the pair, immediate support may be found at 1.3130, an area that also encapsulates the 20-day simple moving average (SMA). If sellers manage to push below that hurdle that would mark a touch of the 1.3050 support, increasing the probability for further bearish extensions.
On the flip side, if the bulls retake control, price advance may stall initially near the latest highs at 1.3385. A potential upside violation of this zone would drive the price until the 1.3550 resistance barrier, identified by the June 2017 highs.
Overall, USD/CAD seems to be in a strong upward movement as long as it is trading above the moving averages in the longer-term timeframes, suggesting that the bullish outlook holds.
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