USDCAD marks bullish wave in short-term
2024.01.05 03:23
· meets 20-day SMA
· Technical signals mixed; downtrend well intact
USDCAD has been rising since the end of 2023 after the bounce off the 1.3175 support level and is currently reaching the short-term 20-day simple moving average (SMA) near 1.3373, but is still developing beneath the descending trend line.
The MACD and the RSI are confirming the bullish move in the market as the first one is holding above its trigger line, and the latter is pointing marginally up near the neutral threshold of 50. However, the stochastic oscillator is suggesting an overstretched market and is ticking lower above the 80 level, indicating a potential downside correction.
To attract new buyers, the bulls will have to surpass the nearby resistance of the 20-day SMA at 1.3373 and move beyond the 1.3415 barrier. In this case, the price could pick up steam towards the important falling trend line and the 200-day SMA around 1.3480. Another successful battle there could see the price jumping into the 50-day SMA at 1.3570.
Hence, a downside correction could still be possible in the coming sessions. If the pair slumps below the five-month low of 1.3175 it could stabilize near the 1.3150 support. Otherwise, the sell-off could expand towards the 1.3090 territory.
To sum up, USDCAD has not eliminated downside risks yet, despite marking a positive wave. To boost buying confidence, the pair will need to crawl above 1.3480.
