TECHNICAL ANALYSIS
On the daily chart, it's evident that the USDCAD found support at the critical 1.34 level and surged higher, primarily driven by disappointing Canadian GDP data and a decline in oil prices. During this rally, the pair managed to break through the significant resistance at 1.3668. However, this rapid ascent created a divergence with the MACD indicator, which typically signals a weakening of momentum, often followed by pullbacks or reversals. It's possible that we could witness a pullback to retest the recently breached resistance, now acting as support, in a classic "break and retest" pattern. In the event of a continued decline, the next significant level to watch for is the trendline near the 1.35 mark. Looking at the 4-hour chart, there is a strong support zone aligning with the 1.3668 level, where we also find the 38.2% Fibonacci retracement level, adding to the confluence of support. This area is likely to attract buyers who may enter positions with well-defined risk management, placing their stop losses below this support zone, while targeting the 1.3862 level. Conversely, sellers will be keen to see a breakdown below this support, which could intensify bearish momentum and set the stage for a decline toward the trendline.
Disclaimer: FMI's research services provide general information. The Users should evaluate the relevance to their specific needs.
