USDCAD stabilized within the 1.33 handle after Monday’s rally, with momentum indicators supporting that consolidation may continue in the short-term; the RSI has reversed down to meet its 50 neutral mark, the MACD has improved above its red signal line and towards zero, while the Ichimoku Indicators, (the red Tenkan-sen and the blue Kijun-sen lines) have moved sideways. The 20- and the 50-day simple moving averages (MA), though, which are set for a bearish cross, suggest that the downfall off 1.3663 may be more than temporary.
On the downside, the bears could meet immediate support around the 50% Fibonacci of 1.3221 of the upleg from 1.2781 to 1.3663, which they failed to overcome last week. If this prove a weak obstacle this time, the restrictive area around the previous low of 1.3179 should be another area to watch before the 200-day MA currently at 1.3100 comes into view. Any decisive close below that line could activate a stronger selling pressure.
Should the pair crawl above the 38.2% Fibonacci of 1.3325, the pair will likely retry to break resistance between 1.3370-1.3385. Slightly higher the 23.6% Fibonacci of 1.3455 could also halt upside movements, though, the 1.3600 round level is expected to be a bigger challenge as any violation at this point could reassure that the uptrend off 1.2781 is not over yet.
Turning to the medium-term picture, the rebound from the 1.3179 trough kept the market bullish in the three-month timeframe. A failure to hold above that mark would turn the outlook neutral while a rally above the 1.3663 peak would turn the market even more positive.
