USDCAD maintains a bearish market structure and is at risk of falling to the July 27 low of 1.2413, a level not seen since June 2015. The pair has been recording lower highs and lower lows since the May 5 high of 1.3793.
The short-term picture is neutral to bearish. After USDCAD attempted to bounce from 1.2413, the rally faded roughly at the 23.6% Fibonacci retracement (1.2735) of the decline from 1.3793 to 1.2413. USDCAD is down over 2% so far after reversing from the August 15 high of 1.2777.
Support is expected at 1.2413 ahead of the next lows at 1.2127 and 1.1919. Immediate resistance is at the round level of 1.2600, which was respected earlier this week. A break above this level would target the 23.6% Fibonacci (1.2735) and 1.2777 high. From here, further barriers exist at 1.2939 (38.2% Fibonacci). Next comes the 50% Fibonacci at 1.3100, above which the trend is likely to change.
The underlying trend remains bearish for the medium term with increasing risk to the downside as RSI is below 50 and declining. The 50-day and 200-day moving averages are negatively aligned following a bearish crossover on July 13.
