**USDCAD Technical Breakdown: Sellers Gain Momentum Amid Key Moving Averages Interaction**
*Adapted and expanded from original analysis by Adam Button on InvestingLive.com*
The USD/CAD currency pair has recently shown increased volatility and directional bias, sliding to new multi-day lows as sellers re-enter the market. This price shift comes against the backdrop of a changing risk landscape and a clearer technical setup as market participants closely monitor the action around key moving averages.
This comprehensive breakdown explores:
– The technical levels currently impacting USDCAD price action
– The role of the 100- and 200-hour moving averages (MA)
– Broader macroeconomic influences driving Canadian dollar strength
– How oil prices and interest rate expectations are shaping sentiment
– A projection of potential future scenarios, support/resistance zones, and trading biases
Let’s take a closer look at the evolving situation in the USD/CAD market.
## Overview of USD/CAD Price Action
The USD/CAD pair has fallen decisively below the 1.3660 level, driven by a host of technical and fundamental factors. Initially trading closer to 1.3700, the pair slid lower after a brief retest of the 100- and 200-hour moving averages.
Key developments:
– Sellers reacted strongly to resistance at the 100- and 200-hour MAs early in the week
– Prices were rejected at 1.3699, which aligned closely with the 100-hour MA and a historical swing area around 1.3694 to 1.3699
– Momentum built on the downside as the pair broke below immediate support at 1.3660 and later continued toward 1.3630 and 1.3600
– As of Tuesday morning, traders noted selling pressure leading to a lower low near 1.3604, nearing a key higher support area at 1.3573 to 1.3579
What this reflects is a broader shift in trader sentiment, with a willingness to sell USD/CAD rallies rather than pursue momentum-driven breakouts to the upside.
## Technical Indicators and Chart Analysis
Recent price movement in the USDCAD pair has largely been defined by interactions with short-term moving averages and key horizontal support/resistance levels.
### 1. The 100- and 200-Hour Moving Averages
– The 100-hour MA currently sits around 1.3689, while the 200-hour MA sits slightly below at 1.3681. These two averages converged on Monday and Tuesday, creating a significant technical barrier for any upward attempts.
– Traders saw this convergence as a short-selling opportunity. This is a common phenomenon in FX markets, where confluence zones of MAs become self-fulfilling technical magnets for price action.
– The price’s failure to clear this area further reinforces bearish pressure, suggesting a shift in momentum to the downside over the short term.
### 2. Key Support and Resistance Levels
Below are the significant short-term and medium-term support and resistance levels to monitor:
**Support Levels:**
– 1.3611: A key lower support barrier that temporarily stalled the pair’s fall
– 1.3604: Recent swing low and a price zone where buyers may look to re-enter
– 1.3573–1.3579: A broader support range with historical significance, acting as a line-in-the-sand for buyers. A breakdown here may open the door toward more significant declines
**Resistance Levels:**
– 1.3663–1.3667: Former support, now turned resistance. A failure to break above suggests dominance of sellers
– 1.3681 (200-hour MA) and 1.3689 (100-hour MA): Key resistance zones that will likely determine near-term trend direction
– 1.3694–1.3699: Historical swing area that reinforced early-week rejection
### 3. RSI and
Read more on USD/CAD trading.