USDCAD is at Multi-Year Low – When the Sell Will End?

USDCAD is at Multi-Year Low – When the Sell Will End?

 Published: June 1st, 2021

USDCAD broke below the 1.2400 level on April 28 and lost almost 2.6% in a month. Moreover, from March 2020 to May 2021, the price has lost nearly 14.5%. The massive selling pressure came from the Canadian Dollar's strength with the Oil price appreciation and post-Covid recovery speed.

WTI Crude has gained 7.5% since April 26 and moved to the record high since October 2018. The strong bullish gain in Crude Oil influenced the Canadian Dollar as it represents 11% of the Canadian economy.

Besides, the Bank of Canada has become the first major central bank that reduced the stimulus program as soon as it cut its bond-buying program from CAD 4 billion to CAD 3 billion.

On the other hand, the US Dollar is facing indecisive momentum due to an inflation fear. Therefore, any clear economic projection from the Fed on June FOMC would add momentum to the USDCAD from the USD front. As of now, investors need to see a strong reason to believe that the price will go up. Before that, the momentum may follow the price direction based on USDCAD technical analysis.

USDCAD Daily Chart

USDCAD Daily Technical Analysis 1 June 2021

USDCAD is moving down with a strong bearish pressure where the most recent price remained within the range between 1.2133 to 1.20 level. Therefore, as the price is moving down within the range, it has a higher possibility of continuing the trend below the 1.20 level in the coming days.

In the above image, we can see the daily chart of USDCAD where the price made multiple bullish rejections at the 1.2133 level. Moreover, the dynamic level of 20 EMA came closer to the price and moved down, pointing out that short-term traders are still bearish.

The price remained almost in the middle of the range where any sign of bullish rejection would increase the bearish possibility of the price. Moreover, the MACD is bullish, but Histogram failed to make a new high. Therefore, any new low in MACD Histogram may increase the bearish possibility of the primary target at 1.20 level.

USDCAD H4 Chart

USDCAD H4 Technical Analysis 1 June 2021

If we plot the Ichimoku Cloud to the USDCAD H4 chart, we would see that the price is trading below the Kumo Cloud for a considerable time. Last week, the price tried to break above the cloud multiple times but failed. On the other hand, the future cloud remained flat, pointing out a possible correction in the price.

In the above image, we can see that the price consistently makes new lows after rejecting the cloud resistance. Moreover, the dynamic Tenkan Sen and Kijun Sen remained above the price and heading down. The Chikou Span is also moving down and staying below the price.

In this market condition, USDCAD has a higher possibility of continuing the bearish pressure below the 1.20 level. On the other hand, any extension in the corrective momentum may take the price higher towards dynamic levels. Still, a strong bullish H4 close above the cloud resistance 1.2120 may make the current bearish momentum questionable.

USDCAD H1 Chart

USDCAD H1 Technical Analysis 1 June 2021

In the USDCAD intraday chart, the price faced a bullish rejection from the intraday high volume level at 1.2050 level. Therefore, as long as the price is trading below the 1.2050 level, the current momentum may remain bearish.

In the above image, we can see that the price made multiple lows in the intraday high volume level, pointing out that sellers are still interested in taking the price down. Moreover, the price broke below the dynamic 20 EMA and vwap for more than 24 hours. Currently, dynamic 20 EMA is a minor resistance to the price at the most recent high volume level.

In this market condition, the price has a higher possibility of moving down if it breaks the most recent low of 1.2028. On the other hand, the corrective MACD Histogram is a sign of an extension to the correction where any bullish H1 close above the intraday vwap level may alter the current market structure. In that case, the price may move up towards the 1.2133 resistance level. Should You Try Selling USDCAD?

As of the above discussion, we can say that the USDCAD has a higher possibility to move lower below the 1.20 support level, where the ultimate target of the bearish pressure is 1.1800.

On the other hand, the price is still within a range where any bullish H4 close above the Kumo Cloud may alter the current market structure and take the price higher towards 1.2133 and even 1.2300 level.

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