On the daily chart below for USDCAD, we can see that the bearish trend remains intact, and the moving averages are acting as resistance for the sellers. The latest pullback is finding resistance at the previous swing low level at 1.3405 and the blue short period moving average .
This pullback started as the US Retail Sales report missed expectations across the board and kicked a move higher in the USD as it’s the preferred currency in times of recessions. The momentum was boosted further by hawkish comments from Fed’s Waller and the 1 year inflation expectations in the University of Michigan survey showing a big jump to the upside. The sellers are still eyeing the support at 1.3225.
USDCAD technical analysis
On the 4 hour chart below, we can see that the bearish momentum to the downside is waning as depicted by the divergence of the price with the MACD. This divergence into the major support at 1.3225 may be a bad omen for the sellers. For now, the sellers are in control though. The price is now at the previous swing low level and the 38.2% Fibonacci retracement level with the trendline defining the bearish trend. The buyers will need a break above the trendline to get the conviction to start charging higher and target the resistance at 1.3553.
On the 1 hour chart below, we can see more closely the current price action around the resistance. As mentioned above, the buyers will want a break above the trendline before piling in, while the sellers should use that zone as the last line of defence. In the near-term, a break below the swing support at 1.3343 should see sellers piling in and target the support at 1.3225.
