USDCAD is currently declining towards the lower band of the Ichimoku cloud, though still confined within a consolidation that commenced on April 6. Looking towards the Ichimoku lines and the cloud, they suggest the sideways market may endure a while longer, with their somewhat horizontal tone.
Turning to the short-term oscillators, they too portray a phase of starved momentum, although slightly tilting negative for now. The MACD, in the positive area is under its red signal line but only just above the zero mark, while the RSI is marginally weakening below its neutral threshold. The stochastic lines deflected off the 80 level and are bearish, mirroring the current down move in the price.
In the negative scenario, support could commence at the clouds’ lower band ahead of the base of the trading range at 1.3850. A dip under this border could encounter the 1.3809 level, which is the 50.0% Fibonacci retracement of the up leg from the 14½-month low of 1.2951 to the 50-month high of 1.4667. Moving down, the key 1.3724 and 1.3681 troughs could apply the brakes ahead of the tough 61.8% Fibo of 1.3608, coupled with the 100-day simple moving average (SMA).
If buyers retake the reins, immediate resistance could arise around the 38.2% Fibo of 1.4013 – where the flat Tenkan-sen line and 50-day SMA reside – prior to the blue Kijun-sen line at 1.4057. A run above the clouds’ upper band could meet the 1.4173 obstacle ahead of the 23.6% Fibo of 1.4264, which happens to be the ceiling of the range. Stepping above, resistance may surface from the 1.4300 and 1.4348 highs before the price rally’s for the 1.4531 to 1.4558 peaks.
Summarizing, the short-term bias remains neutral-to-bullish above 1.3850 backed by the rising SMAS. That said, the pair remains confined within a sideways structure from 1.3850 to 1.4264 and a break either below or above could reveal the next direction.
