After breaking below the May 2016 low of 1.2460 support, USDCAD rebounded strongly from 1.2413 and moved above the bearish trend line on its daily chart. However, the bounce from 1.2413 would possibly be consolidation of the downtrend from 1.3793, another fall towards 1.1500 is still possible after the consolidation.
On the downside
USDCAD broke below an important support level at 1.2650 on its 4-hour chart, indicating that the short term uptrend from 1.2413 had completed at 1.2778 already. Further decline could be expected and next target would be at 1.2535, followed by 1.2413 previous low. Below these levels could bring price back to the long term downtrend from 1.3793, then the pair would find support at the following technical levels:
- The bullish support trend line from the September 2012 low of 0.9632 to the July 2014 low of 1.0619 on the weekly chart, now at around 1.2300.
- The 50% retracement, taken from the July 2011 low of 0.9406 to 1.4689 at around 1.2050.
- The final target for this long term bearish movement would be at 1.1400 – 1.1600 area.
On the upside
Near term resistance is at 1.2778. A break out of this level will suggest that lengthier correction for the downtrend is needed, then next target would be at the January 31 low of 1.2968, the support-turned-resistance.
Support levels: 1.2535, 1.2413, 1.2300 (the bullish support trend line on the weekly chart), 1.2050 (the 50% retracement), 1.1400 – 1.1600 area.
Resistance levels: 1.2778 (near term resistance), 1.2968 (the support-turned-resistance).