USDCAD had a deep fall on Thursday challenging again the 23.6% Fibonacci retracement level of its long way up from 1.2060 to 1.3385, around 1.3072. Currently, the pair remains slightly above the 20- and 40-simple moving averages (SMAs) in the daily timeframe, but the risk is to the downside today as well. The technical picture supports that the range bound movement is likely to continue in the short-term.
Looking at momentum indicators, the RSI is moving south and is approaching the neutral threshold of 50, suggesting that the market could keep moving downwards in the near term. The MACD also supports this view as it has fallen below its red trigger line in the positive territory.
In the wake of more negative pressures and a slip below the 23.6% Fibonacci and the 20-day SMA, the market could meet support at the 40-day SMA near 1.3000 at the time of writing. A significant leg below this level could see a retest of the previous trough of 1.2910, while in case of steeper declines the price could breach this bottom, diving to the 38.2% Fibonacci of 1.2880.
On the upside, in case of a rebound on the 23.6% Fibonacci, the pair could find resistance at the nearest level of 1.3170. A stronger barrier though could be found at the 1.3230 mark, if the positive momentum increases. The next level in focus could come from the 1.3290 since any strong violation of this point could increase chances for further gains probably towards the one-year high of 1.3385.
Turning to the long-term view, the market seems to be in strong bullish mode given that USDCAD trades above the ascending trend line, which has been standing since September 2014. But, in the medium-term, the pair looks to be negative over the last four months, creating lower lows and lower highs.
