The USDCAD shifted its technical bias to the downside yesterday after re-entering the “red box” and breaking below a swing area near the top of this range (between 1.3784 and 1.3803). The “red box” largely defined the trading range from mid-April to mid-July, before the price broke higher, reaching the year’s high at 1.39458.
Yesterday’s decline also saw the pair fall below the 50% midpoint of the move from the July low to Monday’s high near 1.39458. This midpoint level is at 1.37669. However, the selling found support, with buyers stepping in near the 200-bar moving average on the 4-hour chart and the 61.8% retracement of the same move higher from the July low, around 1.37247.
Since then, the price has been oscillating between the 50% midpoint at 1.37669 and the 61.8% retracement/200-bar moving average on the 4-hour chart at 1.37247. Buyers and sellers are currently in a standoff, awaiting the next significant move.
In this video, I outline the price action and technical levels in play and explain the reasoning behind these movements.
PS. The 200 bar MA on the 4-hour chart did it's job.
In my video yesterday titled "Unlock the power of the 100/200 bar MAs to limit risk in your trading", I talked about this dynamic.. It also explains my mindset seen in my posts and in my videos.
