Title: USD/CAD Technical Breakdown – Price Slides Through Key Fibonacci Support
Source: Adapted and expanded from article by Adam Button on ForexLive via TradingView
The USD/CAD currency pair recently broke below a critical technical support area, marking an important shift in market dynamics that traders and investors are now closely monitoring. This move disrupted a support level derived from the 61.8% Fibonacci retracement, a key indicator used by technical analysts, suggesting that further downside may be developing. As the pair tests secondary support levels, the evolving technical picture is likely to guide near-term trading strategies.
This article delves into what’s currently driving the USD/CAD pair, focusing on recent price action, technical levels, economic context, and upcoming factors that could influence its trajectory. By analyzing chart patterns, historical levels, and fundamental influences, traders can better understand the outlook for this major forex pair.
Highlights:
– USD/CAD fell below a key Fibonacci retracement level at 1.3640
– The 61.8% level was calculated from the April low to the May high
– Price action is now testing an old ceiling-turned-floor zone near 1.3612
– Market momentum suggests sellers are currently in control
– Attention now turns to further support and resistance levels, as well as U.S. and Canadian economic indicators
1. Technical Breakdown of USD/CAD
The latest drop in the USD/CAD comes after a period of consolidation in early June. The pair found resistance earlier in the month near its recent May highs of around 1.3790, followed by a gradual decline. A critical zone in this downtrend was the 61.8% Fibonacci retracement level at approximately 1.3640.
The break below this level indicates a shift in market sentiment, from mildly bullish to neutral or even bearish. Traders often watch the 61.8% Fibonacci level — known in technical analysis as the “golden ratio” — for support and reversal opportunities. When this level is breached, it often triggers momentum-based selling.
Key Technical Levels to Monitor:
– Resistance:
– 1.3790 — High reached in May, represents a possible upper bound of recent rally
– 1.3700 — A psychological resistance level, and minor recent top
– Support:
– 1.3640 — Former 61.8% Fibo level, now likely to act as resistance
– 1.3612 — A critical pivot zone, previously resistance now turned potential support
– 1.3562 — Low from late April, next key downside target
– 1.3500 — Major psychological area, often a magnet for price in trending markets
Technical Indicator Summary:
– RSI (Relative Strength Index): Currently near neutral (between 45–50), suggesting no extreme momentum, but trending lower
– MACD (Moving Average Convergence Divergence): Turning downward, with bearish cross indicating weakening trend
– Moving Averages:
– 50-day MA: Near 1.3651
– 100-day MA: Close to 1.3585
– Crossovers between these MAs could act as signals if USD/CAD extends its decline
2. Price Action and Chart Pattern Analysis
The recent chart structure indicates a failed attempt to sustain the May rally into early June. Momentum stalled at 1.3790, and the bearish reversal through Fibonacci and horizontal support indicates a reluctance among buyers to hold at higher levels.
This current move resembles a descending triangle when overlaid on a 4-hour chart, with a flat base near 1.3610 and a descending upper trendline. Descending triangles typically favor bearish continuation.
The decisive break below the 1.3640–1.3650 mark opens additional downside room. More importantly, the test of a previous resistance zone near 1.3612 (going back to early April) could dictate
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