**USD/CAD Technical Analysis: Bearish Momentum Builds as Sellers Eye Critical Resistance Zone**
By [FXDailyReport.com](https://fxdailyreport.com) – Original article by Jonathan Prop
The USD/CAD currency pair has been under increasing bearish pressure lately as technical indicators suggest a potential continuation to the downside. After failing to sustain a rebound, the pair now finds itself testing a significant resistance zone that could trigger renewed selling interest from traders. The recent price action shows clear signs of distribution, with lower highs and lower lows forming a consistent downward trajectory.
This article provides an in-depth analysis of the USD/CAD pair, highlighting key technical factors, economic catalysts, and market sentiment driving current and future price action. We will examine support and resistance zones, potential scenarios from a trader’s perspective, and incorporate additional insights based on recent fundamental developments across both the U.S. and Canadian economies.
## Recent Price Action Overview
The USD/CAD pair recently reached an area of technical interest located around the horizontal resistance zone near the 1.3570 – 1.3600 level. Despite several attempts to break higher, the pair struggled to maintain bullish momentum and quickly reversed. This price structure reflects increased selling activity from market participants, especially near that resistance area.
As of now, the pair trades below the 200-period moving average on shorter timeframes, indicating bearish bias. Technical traders also note a potential formation of a descending channel or flag pattern, typically a continuation formation in trending markets.
## Technical Analysis Summary
Here are key technical aspects of USD/CAD’s price action currently:
– **Resistance Zone**: 1.3570–1.3600
– Price faced repeated rejection from this area
– Sellers enter aggressively at this level
– **Support Level**: 1.3400
– Acts as a key short-term support
– A successful break below this could signal extended losses
– **Moving Averages**:
– 50-period EMA has crossed below the 200-period EMA on the 4-hour chart
– Sign of growing bearish sentiment
– **Relative Strength Index (RSI)**:
– Currently near the 45 level, below neutral
– Indicates bearish momentum is intact but not yet oversold
– **Fibonacci Levels**:
– 38.2% and 50% retracement levels from previous swing highs align with recent rejection zones
– Adds confluence for technical traders watching potential reversals
## Bearish Scenarios: Opportunity in the Making?
Traders watching USD/CAD are closely monitoring how the pair behaves near its current levels. The rejection from resistance reinforces a potential short setup for those readers looking to trade momentum.
Scenario Breakdown:
– **If the pair continues to reject 1.3570–1.3600**:
– Short positions could become more favorable
– Target levels might be:
– 1.3450 (intermediate support)
– 1.3400 (major horizontal support)
– 1.3310 (2024 Q1 swing low)
– **Stop-losses**:
– Above 1.3625 would provide protection against breakout rallies
– Risk/reward ratios become favorable for swing traders around 1.3570
Conversely, any upside breakout above resistance could alter this perspective. Bulls would regain control only if the pair produces a daily close above 1.3625–1.3650, ideally coupled with a sustained increase in bullish volume.
## Fundamental Drivers Influencing the Pair
While the technical picture favors sellers, it’s crucial to understand the macro context that could support or contradict this view. USD/CAD is heavily influenced by economic data from the United States and Canada, oil prices, interest rate differentials, and broader market sentiment toward relative economic strength.
### U.S. Economic Data: Mixed But Strong Overall
The U.S. economy has shown resilience with relatively strong employment numbers
Read more on USD/CAD trading.