The USDCAD is lower on the day and down for the 2nd consecutive day after extending to a new cycle high on Friday. That was the good news for the buyers. The not so good news was the high could only take out the May high by a couple pips before rotating back to the downside. The buyers started to turn to sellers.
Yesterday the price wander to the downside in holiday like trading, and approached support near the 1.2969 to 1.29798 area. Today, that area was broken along with the 100 hour moving average at 1.29603 (blue line in the chart above). Recall from last week that 100 hour moving average did a good job of stalling the falls. Breaking below it today was an important hurdle for sellers.
Nevertheless, the price did bounce back higher after bottoming in the late Asian session. The good news for the sellers, however, is that the 100 hour moving average did hold resistance on the correction back higher in the European session today.
The price has rotated back to the downside. The low for the day in the Asian session came in at 1.2905. The low price in the North American session just reached 1.2907. There is work to do.
On the downside, in addition to making new session lows, the rising 200 hour moving average (green line) comes in at 1.2889. A move below the 200 hour moving average is the next major step that would increase the bearish bias at least in the short-term. The price has not traded below the 200 hour moving average since June 9. At that time, the moving average was near 1.2600.
The break above on that moving average level on day was met with strong buying which culminated in the rise to the high from last Friday at 1.3078. That equated to a gain of 478 pips over 6 trading days.
Now the sellers are making a play, but there is work to do..
The price has moved below the 100 hour moving average which is a step 1. Step 2 is to get below the 200 hour moving average. Below that would be the 38.2% retracement of the move up from the June 8 low which cuts across at 1.28637.