USDCAD is strongly bearish as it extends its slide to a more than 2-year low of 1.2063. The overall technical structure is indicating weakness in the market, especially after the bearish crossover of the 50-day with the 200-day moving average in July. Momentum signals are bearish.
The downtrend that started from the May 5 high of 1.3793 remains intact and is gaining traction. The break of very strong support at 1.2400 this week has increased downside pressure. Only a move back above this level would help stabilize the market. However, any bounces would find resistance at 1.2777. Above this, the level at 1.3015 would be challenging to break since it provided strong support in the past (between September 2016 and February 2017). Clearing 1.3350 and the 200-day MA would shift focus to the upside for a re-test of 1.3793.
Momentum oscillators are supportive of additional declines in USDCAD as they are in bearish territory. MACD is below zero and falling. RSI is below 50 although it is now in oversold territory, which indicates the possibility of a corrective move up or a consolidation in the market in the near term.
The odds for reaching support at the next major low of 1.1919 (May 2015 trough) are high now, with little indication of a change in the current downtrend.
The medium-term bearish trend is expected to remain intact as the loss of a key support level this week suggests near-term risk is strongly tilted to the downside.