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USD/CAD Forecast: All Is Not Lost For The Bulls

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  • The USD/CAD could extend the 300-pip drop from 1.3125 (March 19 high) to ascending 50-day MA.
  • The long-run momentum studies are aligned in favor of the bulls.

Currently, the USD/CAD pair is trading at 1.2838 - down 2.18 percent from the recent high of 1.3125 and could extend losses further, the daily chart indicates.

Daily chart

usdcaddaily-636577276037648030.png

The bearish price-relative strength index (RSI) divergence, followed by a breach of the ascending trendline suggests the rally from the low of 1.2247 has ended. Further, the 5-day moving average (MA) and 10-day MA are trending lower in favor the bears. Meanwhile, the RSI has rolled over into bearish territory.

So, the spot may revisit the ascending 50-day moving average, seen today at 1.2726. But reckon the support would hold, given the long-run moving average studies are biased bullish.

For instance, the 50, 100 and 200 MAs are trending north and aligned one below the other, signaling the outlook remains bullish despite the 2.18 percent drop from the recent highs. Further, the weekly 5MA and 10MA are sloping upward in favor of the bulls.  The weekly chart also shows a bullish 10MA and 200MA crossover.  

As of writing, the ascending 10MA on the weekly is positioned at 1.2705 and the ascending 5MA is located at 1.2903.

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The spot may drop further, but will likely find bids around 1.27 and test supply around the ascending trendline resistance (seen today) at 1.2980-1.30. A daily close above the trendline would open doors for a re-test of the recent high of 1.3125.

 

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Posted-In: FXStreetNews Forex Markets

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