USDCAD has turned bearish after breaking below the 200-day moving average today, reaching a 2-month low of 1.3256. RSI is falling and suggests a further possibility of a deeper decline with scope to target the April 13 low of 1.3222.
The market was trading in a range since May 25 until this week, between 1.3400 and 1.3546. But a failure to make a sustained break above the 50-day moving average led to weakness in upside momentum, with prices eventually giving way to drop below what was key psychological support at 1.3400. Meanwhile, the 50% Fibonacci retracement level at 1.3507 of the rise from 1.3222 to 1.3792 was acting as a strong barrier to the upside.
With the market now almost having retraced all of the uptrend from April to May, the trend has shifted to a more neutral one in the medium term. What appeared to be a bullish phase in progress from the 1.3000 area (rise from February) to the peak at 1.3792 (May 5) has now been negated. The oscillator studies support the bearish bias in the market, with RSI and MACD turning down and in bearish territory.
Origin: XM
