USD/CAD traded somewhat lower during the European morning Tuesday and at the time of writing, it looks ready to challenge yesterday’s low, at around 1.3416. The pair has been in a declining mode since Friday, when it hit 1.3515, the upper bound of a sideways range that’s been containing the price action since April 23rd, and thus, although we would consider the near-term outlook to be flat, we would expect some further declines within the range.
If the bears are strong enough to overcome the 1.3416 level, we could see them driving the battle towards the low of May 16th, near the 1.3400 zone. If that level is not able to halt the slide either, its break could carry more downside extensions, perhaps aiming for the lower end of the aforementioned range, at 1.3380. That said, we would like to see a decisive close below that zone before we start examining whether the picture has turned from flat to negative.
Turning attention to our short-term oscillators, we see that the RSI lies below 50 and points somewhat down, while the MACD lies below both its zero and trigger lines. These indicators detect slightly negative momentum and support the notion for some further retreat.
On the upside, we would like to see a decent rebound above 1.3448 before we drop the case for a test near the lower bound of the range. Such a recovery could be a sign that the bears have abandoned the battlefield for a while and may allow the bulls to aim for the 1.3472 zone. Another break, above 1.3472, could pave the way towards 1.3493, a resistance marked by the high of May 15th.
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