On Monday during the early European trading hours, the USD/CAD currency pair extended its losing streak for the fourth consecutive session, trading at around 1.3840. The pair has been on a downward spiral, recently dropping to a six – month low of 1.3833, which coincides with the lower boundary of the descending channel on the daily chart. This continuous decline has painted a bearish picture in the market, with technical indicators further confirming the prevailing downward bias.
Technical Indicators’ Signals
The 14 – day Relative Strength Index (RSI) has been a key factor in analyzing the USD/CAD pair’s performance. Currently, the RSI has fallen below 30, a level that not only solidifies the bearish sentiment but also indicates that the pair is in oversold territory. In the world of technical analysis, an oversold reading on the RSI often suggests that an upward correction might be on the horizon. However, in the current scenario, the overall downward trend is still dominant.
Adding to the bearish signals, the USD/CAD pair is trading below its nine – day Exponential Moving Average (EMA). The nine – day EMA, currently at 1.4057, acts as a significant resistance level. A currency pair trading below its EMA typically indicates weak short – term price momentum, suggesting that the downward pressure on the USD/CAD pair is likely to continue in the near term.
Support and Resistance Levels
Looking at the support levels, the recent six – month low of 1.3833 is a crucial mark. If the pair manages to break below the lower boundary of the descending channel, which is around the 1.3810 level, it could lead to a further strengthening of the bearish bias. In such a case, the next support level to watch out for is around 1.3419, the lowest level since February 2024. This level could act as a major floor for the USD/CAD pair, and a break below it could trigger a more significant downward movement.
On the resistance side, the nine – day EMA at 1.4057 is the first major hurdle for the USD/CAD pair. A break above this level would be a positive sign for bulls. If the pair can surpass this resistance, the next target would be the upper boundary of the descending channel at 1.4190. A successful breach of the channel’s upper boundary could potentially shift the market sentiment from bearish to bullish, leading the pair to test the 50 – day EMA at 1.4248. Beyond that, the two – month high of 1.4543, recorded on March 4, stands as a strong resistance level.
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