- USD / CAD gains some traction for the second day in a row, although it lacks continuation.
- A sustained force above the confluence zone at 1.3175-80 is needed to negate the bearish bias.
The USD / CAD pair has struggled to capitalize on its positive intraday move and has remained capped below significant confluence resistance near the 1.3175-80 region. The mentioned barrier is made up of a downtrend line over a week and a 200 hour EMA.
The pair’s inability to capitalize on the previous day’s positive rebound from the six-week lows, coupled with bearish technical indicators on the daily chart, suggests that the short-term bearish bias may still be far from over. Also, the oscillators on the 1-hour charts have struggled to gain significant traction and warrant some caution for the bulls.
That said, a convincing break above the confluence zone at 1.3175-80 could trigger a new short covering attack and push the USD / CAD pair back above the 1.3200 level. Some subsequent purchases have the potential to carry the pair towards the test of the strong breaking point of the horizontal support at 1.3235-40, now turned into resistance.
On the other hand, immediate support is near the 1.3125 area, closely followed by the 1.3100 level and the previous day’s lows around the 1.3080 region. Failure to defend such support levels will add credibility to the bearish outlook and pave the way for an extension of the recent downward movement in the USD / CAD pair.
USD / CAD 1 hour chart
Credits: Forex Street
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