USD/CAD Price Analysis: Bears need acceptance below 1.2420 to keep reins
- USD/CAD retreats towards monthly low, fades Friday bounce off.
- 200-SMA, five-week-old support line and one-month-old horizontal area challenge bears.
- Bulls require sustained break of a resistance line from July 19 to retake controls.
- Bearish RSI line suggests, failures to rebound signal slower grind to the south.
USD/CAD remains pressured around 1.2475 heading into Monday’s European session. In doing so, the Loonie pair fails to extend Friday’s bounce off the 1.2420 support confluence.
Given the downbeat RSI line and limited capacity to hold 200-SMA, until a descending resistance line from July 19, USD/CAD bears are likely to remain dominant.
However, multiple supports between the said SMA and an upward sloping trend line from June 23, not to forget an area comprising levels marked since June 30, limit the pair’s downside above 1.2420.
Should the quote break the 1.2420 support, its slump to July low near the 1.2300 threshold can’t be ruled out.
Meanwhile, recovery moves need to cross the stated resistance line surrounding 1.2535 to poke the previous week’s top close to 1.2605.
In a case where the USD/CAD remains bullish past 1.2605, 1.2675 may offer an intermediate halt during the run-up to challenge July’s high near 1.2810.
USD/CAD: Four-hour chart
Trend: Further weakness expected