The USDCAD on the D1 time frame was in an uptrend until 13 October when a last higher top was recorded at 1.39760.
A closer look at the Momentum Oscillator reveals negative divergence between point “a” and “b” when comparing the tops at 1.38338 and 1.39760. This could have alerted technical traders that the bulls might be getting tired.
After the higher top at 1.39760, the price crashed through the 15 and 34 Simple Moving Averages and the Momentum Oscillator switched direction into bearish terrain.
This confirmed that the bears might be ready for action.
A possible critical support level formed when a lower bottom was recorded on 27 October at 1.34944.
The bulls tried to fight back but a lower top formed on 3 November and the bears took control of the market again.
On 4 November the price of the USDCAD currency pair broke through the critical support level at 1.34944 and three possible price targets were projected from there.
Attaching the Fibonacci tool to the lower bottom at 1.34944, and dragging it to the resistance level at 1.38074, the following targets were calculated:
- The first target was estimated at 1.33010 (161.8%) and the market triggered this on 11 November.
- The second price target was calculated at 1.29880 (261.8%)
- The third and final target can be expected at 1.24815 (423.6%)
If the resistance level at 1.38074 is broken, the above scenario becomes invalid and any open risk must be reduced or removed.
As long as sellers maintain the negative sentiment and supply overcomes demand, the outlook for the USDCAD currency pair will remain bearish.