USDCAD’s sell-off is taking a breather around a new 32-month low of 1.2687, which is looking to be a suitable position for an upside reversal as the RSI and the Stochastics seem to have found a bottom in the oversold territory. The negative momentum in the MACD has also eased, backing the above narrative.
On the upside though there are two key obstacles that the bulls should overcome first before they stage a notable rebound. The 1.2787 resistance is the nearest followed by the 20-day simple moving average (SMA) currently around the 23.6% Fibonacci retracement of the 1.3389 – 1.2687 downleg at 1.2852. Should these barriers give the green light, the door would open for the key 1.2955 – 1.3038 zone formed by the 38.2% and 50% Fibonacci levels. However, even if that is the case, the downward pattern in the broader picture would remain in place unless the price shoots above September’s peak of 1.3419, which is currently in a long distance.
In the negative scenario, where the pair slips below the 1.2687 floor, the sell-off may get new legs towards 1.2550, while beneath that, the 1.2400 mark could be another place to watch given its defensive actions against bearish corrections in 2015.
Summarizing, USDCAD may attempt to recoup some lost ground in the near term. However, whether such an effort will be successful may depend on the 1.2787 – 1.2852 zone.
