The USDCAD currency pair has experienced a notable recovery after a period of decline last week. This previous downturn saw the pair fall below its 100-hour and 200-hour moving averages, indicating a shift in immediate technical sentiment towards selling pressure. The depreciation also breached the mid-July low around 1.4000, reaching a session bottom of 1.3990.
However, this downward movement paused just above a significant Fibonacci retracement level. Specifically, the 38.2% retracement of the upward trend from the May 1 low to the June high, positioned at 1.39812, proved to be a critical support point. For sellers to establish a more dominant position, they would need to decisively break and maintain prices below this Fibonacci level, which they were unable to achieve last week.
Friday's trading session observed a rebound in the pair, although these gains ultimately diminished, with prices retreating to close near the 1.4000 mark. As trading commenced today, early selling interest in the Asia-Pacific session once again encountered support at approximately 1.40005, triggering another upward move. This level around 1.4000 is often watched by retail forex and CFD traders as a psychological whole number, potentially acting as a support or resistance zone. Such round numbers can sometimes influence trading decisions due to their perceived significance.
Resistance Challenges Buyers
Despite the recent bounce, buyers have not yet managed to regain control above the declining 100-hour moving average, currently situated at 1.4051. To enhance the short-term bullish outlook, the pair would need to climb past this 100-hour average and subsequently overcome the 200-hour moving average, which stands at 1.40709. These moving averages are commonly used by traders to gauge trend direction and potential dynamic support/resistance.
At present, the trading landscape for USDCAD appears clearly defined. Support continues to hold near the 1.4000 level, while resistance is primarily encountered at the aforementioned moving averages, limiting upside potential.
📰 Based on reporting from: ForexLive →