USDCAD flew straight to the 1.3600 territory and back above the 200-day simple moving average (SMA) on Thursday after stubbornly refusing to close below the 1.3400 level during the past few days.
The strong rebound in the RSI, which jumped above its 30 oversold mark, and the improving MACD, provide encouragement that the pair could keep recouping losses in the short-term. Still, the battle with the 23.6% Fibonacci extension of latest downfall at 1.3633 and the 20-day SMA at 1.3680, which capped upside corrections in late May, may prove a struggle and the bulls may need to push harder to stretch the recovery towards a tougher barrier placed between the 38.2% Fibonacci of 1.3830 and the descending trendline from the 1.4667 peak. A decisive close above the line could boost the price towards the 50% Fibonacci of 1.3990.
On the other hand, downside corrections cannot be ruled out as the RSI remains within the bearish area and the pair is trading within overbought waters in the four-hour chart. In this case, the 1.3525 barrier taken from the lows in early March and the 200-day SMA should act as immediate support to keep some optimism intact. Otherwise, the bears could drive towards the 1.3400 mark, a break of which could see the retest of the 3-month low of 1.3314. Lower. the price could head for the 1.3200 level, further strengthening the bearish outlook in the medium-term picture.
In brief, USDCAD could trade neutral in the short-term unless it manages to close above the 20-day SMA, in which case it could advance towards the descending trendline.
