Bears move in and eye a break of critical support
- USD/CAD bulls look to the 50% mean reversion target of the bearish impulse.
- Bears eye supports below 1.3300, targeting 1.3250/20 and then 1.3200 / 1.3150.
USD/CAD has blown off on Tuesday as preliminary domestic data showed the economy growing at a slightly faster pace than the Bank of Canada expected in the fourth quarter. This brings us to the Federal Reserve meeting on Wednesday with the technicals well entrenched for a breakout to the downside if the market gets what it’s looking for from the meeting.
The following illustrates a bearish outlook for the short term to 1.3150 based on the daily and 4-hour charts:
USD/CAD daily charts
Zoomed in …
USD/CAD has started to make its way to the bull cycle’s supportive trendline by breaking down structures along the way.
It failed to stay above the near-term bearish dynamic resistance as illustrated above which keeps the focus on the downside, for now.
USD/CAD H4 charts
The price could stall here and correct towards the 50% mean reversion of the bearish impulse before meeting resistance again and dropping into test the supports below 1.3300, targetting 1.3250/20 and then 1.3200 / 1.3150.