The sharp fall after the BOC yesterday saw the corrective rally extend above the 100/200 hour MAs earlier today
The Bank of Canada surprise market yesterday by announcing they would stop there bond buying and will look to raise rates in the middle quarters of next year.
The pair quickly moved below its 100 and 200 hour moving averages on the headlines and moved to a low of 1.2299 (call it 1.2300). That was still above the October 21 low price of 1.2287. The sellers could not push further, and some shorts were forced to cover into the close.
Today, the price moved back above the aforementioned 200 and 100 hour moving averages at 1.23589 and 1.23717 respectively (green and blue lines in the chart above). The price stayed above the 100 hour moving average for about six or seven hours (moving to a high price of 1.2382), but ran out of steam and rotated back lower.
Moving back below the 100 hour moving average gave some relief to the sellers. Getting below the 200 hour moving average and staying below is providing even more confidence to the sellers (and problems for the buyers). At least the sellers/bears have the moving averages to lean against in the short term.
So, going forward if the price can stay below those moving averages, that would be the best case scenario for the sellers from a technical perspective. Move back above does not kill the bearish bias (the price is still below a swing level above and below the 1.2400 level), but it would be a disappointment from a technical perspective at least.
On the downside, the low from yesterday at 1.2299 and the low from October 21 at 1.2287 the obvious next targets. Below that and the June 23 swing low at 1.22516 would be a downside target.