- USDCAD meets long-term support trendline near 1.3810
- Technical indicators reflect easing selling interest
- A decisive move above EMAs needed to shift outlook
USDCAD saw limited movement throughout the week and is currently heading for a second consecutive neutral close.
However, the sideways trajectory in the price, combined with oversold signals from the RSI and stochastic oscillator, increases speculation that the recent downtrend may have reached a bottom.
Indeed, the price is hovering near the 1.3810 support region from November 6 and around the ascending trendline drawn from the May 2021 low, making a rebound likely. However, for a meaningful recovery, the bulls will need to push above the broad neutral zone at 1.3950 and break through the 20-day exponential moving average (EMA). The 200- and 50-day EMAs could also present resistance near 1.4055 and 1.4120, respectively. A successful breakout could breathe life back into the pair, potentially boosting buying interest toward the 1.4270 resistance zone, while higher, the spotlight may shift to the crucial barrier at 1.4400–1.4470.
In the bearish scenario, where the price retreats below the support trendline near 1.3790, the 78.2% Fibonacci retracement of the September–February rally at 1.3720 could offer temporary relief. Failing that, the sell-off could accelerate toward the 1.3620 support area, which was the neckline of the double bottom pattern formed last September. A break below that level could trigger stronger selling pressure.
In brief, USDCAD has reached an ideal area for a bullish reversal. However, only a rally above the exponential moving averages and beyond the 1.4100 mark would be sufficient to eliminate downside risks.
Note that Canada is heading to the polls on Monday April 28 to decide whether Prime Minister Mark Carney’s Liberal Party will stay in power.