The USDCAD fell lower last Friday and in the process broke below its 100-day moving average at 1.3565 (blue line in the chart below), it’s a 200-day moving average (green line in the chart below) at 1.3516 and 50% midpoint at 1.3495 respectively. Today, there was an extension to a new low going back to the end of September, but momentum could not be sustained and the price has since rebounded.
Sellers had their shot below the 200-day moving average (green line in the chart below) and 50% retracement levels, and they missed. That is a bit more bullish.
Having said that, the price is back above the 200-day moving average but still below the 100-day moving average at 1.3565. That puts the technical bias on the daily chart in neutral territory (bullish above the 200-day moving average/bearish below the 100-day moving average).
With the price in neutral territory, traders will now look for a shove either higher or lower. Getting above the 100-day moving average at 1.3565 would have traders looking toward the broken 38.2% retracement at 1.35902 followed by a swing area between 1.3641 and 1.3667.
Conversely, a move back below the 200-day moving average at 1.3516 would next target the 50% retracement again at 1.3495. Break below that level and I would expect a run toward the 61.8% retracement of the 2023 trading range and natural support near the 1.3400 level.
For now neutrality is the key word for this pair. Traders are looking for the next a shove.
This article was written by Greg Michalowski at www.forexlive.com. Source