Technical analysis
The USDCAD pair is still sliding lower after suffering multiple heavy technical rejections from its trend defining 200-day moving average.
The daily time frame shows that a bearish head and shoulders pattern has also formed and is close to being activated. The size of the pattern is warning that the pair could drop to the 1.2000 level.
What the possible outcomes are
In our most likely scenario, the bearish price trend continues and the USDCAD pair will fall back towards the 1.2000 support level over the medium-term horizon.
Alternatively, the USDCAD pair will stage a minor recovery back towards the 1.2500 resistance level and then stage a downside move towards the 1.2250 price area.
Key levels
Support 1.2250 1.2000
Resistance 1.2500 1.2600
