The USDCAD broke above a key resistance level at 1.3904 on May 8, marking the end of a multi-week consolidation range. Two days later, the pair tested the 200-day moving average near 1.4015, a critical technical barrier. Sellers leaned against that level on back-to-back sessions, preventing a sustained breakout and triggering a reversal.
By May 14, the price had fallen back to retest the former breakout point at 1.3904. What had served as a ceiling turned into a floor — temporarily. However, that floor gave way in yesterday’s session, with the pair falling back into the prior consolidation zone between 1.37497 and 1.3904, where price had been trapped from April 16 to May 8.
Now, the old support at 1.3904 has reestablished itself as resistance. As long as the pair stays below 1.3904, the bias remains tilted to the downside.
On the downside, watch 1.38607 for near-term support. This level marked swing highs on May 1, was broken on May 8 during the upside breakout, and acted as a launchpad for the May highs (as indicated by the green circles). In the current session, the latest bounce also stalled at that level. A move below 1.38607 could invite more selling pressure and further bearish momentum.
This article was written by Greg Michalowski at www.forexlive.com.
