The USDCAD has recently experienced a downward trend, nearing the crucial 100-day moving average (MA) at 1.35161. This level serves as an important indicator for both buyers and sellers, with the short-term bias leaning slightly positive if the price remains above this point. However, a drop below the 100-day MA would indicate a shift towards a more bearish outlook.
Earlier today, the price briefly dipped below the 100-day MA, but failed to maintain downward momentum and subsequently rebounded. This upward movement surpassed a higher swing area between 1.3553 and 1.35597, but again, momentum waned, and sellers pushed the price back towards the 100-day MA.
The market's next move hinges on whether the price remains above or drops below the 100-day MA. A continued decline would signal a bearish trend, while surpassing the swing area between 1.3553 and 1.35597 on the upside could potentially lead to more bullish control. To solidify the latter scenario, buyers would need to overcome yesterday's high at 1.3581 and the falling 100-hour MA at 1.35896.
Considering the sharp decline of nearly 300 pips in six trading days since last Friday's peak at 1.38039, the market may be a bit oversold (although the trend is lower). Traders looking to take advantage of that may look to put a toe in the water, and lean against the 100 day moving average as support with a stop below. Risk is defined and risk is limited.
