The USD/CAD pair has bounced back and is currently trading around 1.3690. However, technical analysis shows a bearish trend as it stays within a downward channel. The 14-day RSI is near 50, showing a neutral outlook. The pair remains above the nine-day EMA, suggesting some short-term strength. Key support is at the nine-day EMA of 1.3652, with potential targets for decline at the nine-month low of 1.3539.

Potential For Further Declines

If the decline continues, prices could drop to 1.3419, their lowest since February 2024, and perhaps even reach 1.3380. The main resistance lies at the upper boundary of the channel near 1.3750. If the price breaks above this, it might explore a three-month high of 1.4016. The CAD has shown mixed results against major currencies, performing weakest against the GBP. A heat map summarizes the percentage changes among major currencies, with the left column for the base currency and the top row for the quote currency. This information is for general use and involves potential risks. It doesn’t provide personalized financial advice, and individuals are responsible for their decisions. The accuracy and timeliness of the data are not guaranteed. The earlier analysis depicts a currency pair trading within a downward channel, just below 1.3700. Technically, this pattern usually signifies ongoing pressure downward, with testing of lower levels expected before any reversal. Although there’s been a slight bounce, the general trend remains weak unless the channel’s upper line, above 1.3750, is broken.

The Importance Of Key Technical Levels

The 14-day RSI near 50 offers no strong direction, indicating indecision or a pause in momentum. Still, prices above the nine-day exponential average suggest occasional upward movement. The 1.3652 level serves as the next support area traders will watch. If this fails, the previous low of 1.3539, a critical support level, may be tested again. Looking further, the levels of 1.3419 and 1.3380 are not just guesses; they are based on recent monthly extremes that could quickly pull prices lower if sellers take control. A change in momentum could happen if commodity prices drop or demand for the U.S. dollar increases. Regarding resistance, the inability to stay above the descending channel line has sidelined long-term buyers. If the price breaks above, reaching 1.4016 isn’t arbitrary; it’s a significant area that capped price movements over a quarter ago. Beyond the chart, we notice mixed strength in the CAD compared to a range of currencies. CAD’s performance against the GBP stood out negatively and shouldn’t be overlooked. Significant underperformance in one pair may signal underlying weaknesses elsewhere. These relationships help reveal risk preferences across markets. When one leg lags behind, it opens up opportunities, especially for spread and volatility strategies. As we prepare for upcoming sessions, the technical indicators suggest clear pressures are not aligned. Although momentum can shift, current setups may force a decision soon. Patterns like this usually don’t last forever. We should avoid assuming one-way movement. Once support levels near 1.3652 and then 1.3539 are tested, reactions there will be vital. Where buyers re-enter gives insights into short-term demand. This framework will guide trading ranges and breakout preparations. Momentum indicators are close to neutrality, suggesting swift movements when touched. Spending too much time above the EMA without a rise can be as significant as a drop. We will monitor for volume confirmation, especially as prices near the upper limit of this channel. Without it, even a close above 1.3750 may falter due to low conviction. Short-term strategies should remain flexible. Reactions to upcoming macro events or changes in interest rate differentials may manifest in this pair before others. We prefer defined reference points—like those mentioned earlier—rather than making predictions. With several technical levels close together, the market may soon determine its direction. Strategic patience, paired with quick responsiveness, seems like the best approach right now. Create your live VT Markets account and start trading now.

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