USDCAD Technical Analysis: Recent Movements and Key Levels

Overview

The USDCAD currency pair has recently shown significant activity, particularly around its 100-day moving average (MA). After testing this MA over the last two trading days, the pair has seen modest breaks but ultimately failed to maintain a downward trend.

Recent Price Movements

Last Wednesday, the USDCAD formed a double top near the level of 1.42984, leading to a decline that saw the pair drop to a low of 1.4032 over the next five trading days, marking a decrease of approximately 266 pips. This decline took the price below the 100-day MA, which was around 1.4041 at that time.

However, sellers were unable to sustain this break, and the price rebounded. In the Asian and European sessions of the current day, sellers attempted to push the price below the 100-day MA again, reaching a low of 1.4039 before bouncing back above it. This second attempt also failed to generate follow-through selling.

Current Technical Levels

As of now, the price has shown more momentum in its rebound compared to the previous day, surpassing the early Asian session high and approaching the broken 38.2% retracement level at 1.40818. The highest point reached today was 1.4081, where sellers have started to defend against further upward movement.

Key levels have been established by both buyers and sellers:

• Support: The 100-day moving average at 1.4042 is crucial. Buyers have defended this level for two consecutive days, and maintaining above it is essential for the recovery attempt.
• Resistance: The 1.40818 retracement level is currently a hurdle for buyers. A sustained break above this level is necessary to strengthen the recovery and potentially target the falling 100-hour moving average near 1.4112.

Conclusion

The recent trading activity highlights the importance of follow-through after breaks. Although sellers had an opportunity when the price dipped below the 100-day moving average, the quick recoveries indicate a lack of sustained control. Buyers have gained some momentum but still face challenges at the 1.40818 level.

Traders are currently observing these defined levels, waiting for the next significant movement in either direction.