The USDCAD currency pair continues to trade below a falling trendline visible on the 4-hour chart, indicating that the broader downtrend from the 1.3845 high remains firmly in place.
Further Downside Risks
As long as the USDCAD pair remains below the falling trendline resistance, the path of least resistance appears to be further losses. The next key downside targets in this scenario are the 1.3650 and 1.3600 areas.
Sellers remain in control of the directional bias while the price trades below this trendline barrier.
Initial Resistance at 1.3720
In the near-term, the first level of resistance to watch is the 1.3720 area. A break above this level could potentially see the USDCAD pair retrace toward the falling trendline resistance.
However, only a sustained break above the trendline resistance would likely signal that the current downtrend from 1.3845 has completed.
Potential Upside Resumption After Trendline Break
If the USDCAD is able to clear the falling trendline resistance, it would open the door for a potential resumption of the broader uptrend. In this scenario, the next key upside target would be a retest of the 1.3845 high.
For now, though, the technical bias remains bearish while the pair trades below trendline resistance.
Key Levels to Watch
The key levels to watch in the USDCAD are the falling trendline resistance, the 1.3720 initial resistance, and the 1.3650 and 1.3600 downside targets.
Only a break above trendline resistance would shift the technical bias to a more bullish outlook, with 1.3845 being the next upside objective.
The USDCAD remains in a downtrend, but an important technical test looms at the falling trendline resistance. Traders will want to closely monitor the price action around this key barrier to determine if the downtrend will continue or if a more significant reversal could be underway.
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