The USD/CAD pair stages a goodish recovery from a one-and-half-week low touched earlier this Tuesday, though the momentum falters near the 1.3780 region. Spot prices retreat to the 1.3700 mark during the early North American session and remain at the mercy of the US dollar price dynamics.

The prevalent risk-on mood - as depicted by a strong follow-through rally in the equity markets - fails to assist the safe-haven buck to capitalize on its modest intraday gains. This, in turn, acts as a headwind for the USD/CAD pair, though a combination of factors warrants caution for bearish traders and before positioning for deeper losses.

On an hourly scale, the asset has delivered a south-side break of the Rising Channel chart pattern that indicates a bearish reversal. The upper portion of the above-mentioned chart pattern is placed from September high at 1.3838 while the lower portion is plotted from October 5 low at 1.3504.

The major has dropped below the 50-and 200-period Exponential Moving Averages (EMAs) at 1.3784 and 1.3758 respectively, which adds to the downside filters.

Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which signals that the downside momentum has been triggered.

Should the asset drops below the round-level support of 1.3700, the Canadian bulls will drag the asset toward October 6 low at 1.3565. A breakdown of the latter will bring further weakness in the asset towards October 5 low at 1.3504.

On the contrary, the greenback bulls could regain their glory if the asset oversteps the round-level hurdle of 1.3800. An occurrence of the same will drive the asset towards Friday’s high at 1.3898, followed by Thursday’s high at 1.3978.

Bearish on USDCAD Below TL Break & Correction Completion

Oct 18 2022