Stays below 1.2000 level.
The USDCAD over the last few weeks, has had some runs below the 1.1988-1.2000 area (see red shaded areas) and found support against that area on other times (see blue circles). The runs (red areas) were fairly quick. The first one had 4 hourly closes below the level before moving back above. The 2nd look had two hourly bar closes below the level before bouncing. On Tuesday, there were two hourly bar closes below the yellow area before the price bounce (albeit modestly). This run yesterday and today has seen the price remain below for 29 hours now. Is the downside levels being accepted now? Today will be key.
What is the daily chart showing? The little dips below the 1.2000 level were also breaches of the 38.2% of the trend move up from the July low to the March high (at the 1.199140. Each failed as per above. Yesterday we had a close below. Today the high was below the technical level. So the bears are showing more control. Can they show more? Yes, but baby steps perhaps.
Where can it go if the sellers can keep it below the 1.2000 level? The low from January 15 tumbled to 1.1802. The 200 day MA comes in at 1.1755. The 50% of the move higher comes in at 1.17312. If the bears can keep the price below the 1.2000 level, these targets are doable (the 200 day and 50% should be strong support).
Closer to home, the activity is choppy today. It is not a pretty picture to be honest. The range is narrow (50 some odd pips for the day). So there is room to roam and extend. In fact, the price just moved above the high extending the range to the upside as I finish the post. With the price moving above the high for the day, the next stop will likely be the a look/test at the 1.1988-1.2000 level. The market can decide what it wants to do up there. Will the sellers keep the lid on it? That will be the test.
On the downside, if the price is to go lower, watch the converged 100 and 200 bar MAs. The price will need to go and stay below that level to make the sellers/bears more comfortable.
