USDCAD cracks below its support swing area and runs lower. What now?

Technical Analysis

Author: Greg Michalowski | usdcad

Swing area between 1.24215 and 1.24459 held yesterday, but not today.

In a post yesterday, I spoke to a swing area between 1.24215 and 1.2446 (see 4 hour chart below). That area stalled the fall yesterday. The low for the day reached 1.24296.

Swing area between 1.24215 and 1.24459 held yesterday, but not today.
In trading today, that low swing area was broken in the late Asian/early European session and that break led to a run to the downside (see hourly chart below for the break and run) as buyers turned quickly to sellers.

The run to the downside has now taken the price to another swing area target around 1.2354. The low price just reached 1.23539 and is seeing a bounce. The current price is trading at 1.23716 as I type.  

USDCAD on the hourly chart
What now?

Drilling to the 5 minute chart, the pair moved below its 100 bar moving average in the Asian session, corrected up to that MA, before cracking lower.

The consolidation against the support near the 1.2354 level has now seen the 100 bar moving average (see blue line in the chart below) catch up to the price. That MA is currently at 1.23793. 

A move above it - and staying above it - is needed to give the buyers some hope that the low (at least temporarily) is in place. A move above would target the 38.2% retracement of the run lower today at 1.2388 as well as the 50% at 1.2399. The falling 200 bar moving averages at 1.24025 making the 1.2400 area a key intraday level on more upside momentum.

Absent a break of the 100 bar MA on the 5-minute chart, and the sellers remain firmly in control with a break of the 1.2354 area as the next downside hurdle.  

USDCAD on the five minute chart


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