USD/CAD bears retake control in short-term; a possibility of downside retracement.
USD/CAD continues the negative movement that started in the previous week following the pullback on the one-year high of 1.3385. The bearish run 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 a downward correction is near.
Having a look at the daily chart, momentum indicators, they suggest further downside pressures may be on the cards in the short-term. The RSI is hovering near the neutral threshold of 50 detecting negative momentum and is also pointing downwards. The MACD, already negative, lies below its trigger line.
If the pair remains below the 20-day simple moving average (SMA), immediate support may be found at 1.3050. Furthermore, if bears manage to push the price below that hurdle that would mark a touch of the 1.2730 support, increasing the probability for further bearish extensions, but would first need to slip below the 40-day SMA near 1.3000 at the time of writing.
Alternatively, if the bulls drive USD/CAD above the 20-day SMA, it could open the way towards the previous high of 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.
To sum up, the greenback seems to be in a strong bullish rally against the loonie in the medium-term as it is still holding above the ten-month rising trend line.
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