USDCAD has retreated considerably since reaching 1.3793 – the seventeen-month high from May 5th. Yesterday the pair recorded a fourteen-and-a-half-month low of 1.2578.
Turning to the Ichimoku analysis, the negative alignment when the Tenkan-sen line (red) crossed below the Kijun-sen (blue) in late May remains in effect, suggesting a bearish market bias. Regarding the RSI, it is in oversold territory at 24 and currently maintains a moderately positive slope (i.e. it is heading higher). This might hint that momentum in the very short-term is positive on the margin.
Should price action maintain the overall downside momentum from recent weeks, the area around yesterday’s low of 1.2578 might provide support. Further down, the focus would shift to the twenty-four-and-a-half-month low of 1.2460 from May 3 for additional support.
If on the other hand the price advances, the area around the current level of the Tenkan-sen at 1.2760 could act a resistance. Additional gains would turn the attention to the Kijun-sen at 1.2962 and the 1.30 handle – a rather congested area recently – for additional resistance.
Moving to the medium-term picture, the pair recorded a bearish cross last week when the 50-day moving average (MA) moved below the 200-day one. This is a medium-term negative signal which is supported by price action taking place below both MAs, as well as below the Ichimoku cloud.