The USDCAD has been trending lower since peaking at the end of May near 1.36539. Just yesterday the low price extended to 1.3117. That was the lowest level since September 2022.
The move to the downside has seen corrective price action where the price has been able to extend above the 100-hour moving average. However, on each of those breaks, the price has fallen short of its 200-hour moving average (green line in the chart below). That is until today.
In the early Asian session, the price moved above its 200-hour moving average and that gave buyers some control. They took the price above a swing area between 1.3207 and 1.32299. They extended above that area to another swing area between 1.3271 and 1.32853. Sellers have entered against that area (it is hard to shift out of what has been a trend lower). There is some cause for pause after the break higher today.
What next?
A move above the 1.32853 level is now needed to give more control to the buyers – at least in the short term. The 38.2% retracement of the move down from the end of May high comes in at 1.3322. If the buyers are really serious, getting to and through that 38.2% retracement is required.
What would hurt the buyers today? I would expect that on a dip lower, the 1.32299 level would attract buyers. If that level is broken, I would expect some of the buyers today to give up with a break below 1.3207 having traders retesting the 200-hour moving average
This article was written by Greg Michalowski at www.forexlive.com. Source