USDCAD maintains a bearish market structure on the daily chart. Following a drop from a multi-month high of 1.3793, the pair attempted to bounce from a more than one-year low of 1.2413. The rally faded after retracing about 23.6% of this May 5 to July 26 downtrend.
The last two days of declines resulted in a break of the recent consolidation range that took place around this 23.6% Fibonacci level at 1.2736, which appears to have held in terms of resistance.
The near-term bias is showing signs of shifting from neutral to bearish (from August 7). The market is more susceptible to downside risk and would continue to remain so unless prices can reclaim and stay above 1.3100. This would bring USDCAD back to the 50% Fibonacci level of the recent downtrend. A rise above this would increase the odds of a sustained move to the 61.8% Fibonacci at 1.3263 and from here the focus would be on the 1.3793 peak. Clearing this point would see the market in a bullish phase.
Daily signals are bearish and are pointing to the probability of further downside with limited support at 1.2576 ahead of the low at 1.2413. From here the next major low of 1.1919 comes into view.
Overall, the daily technical picture is bearish as there was a bearish crossover of the 50-day with the 200-day moving average on July 12. The near-term bias is neutral to bearish.
