The USDCAD has been on a steady climb since bottoming near 1.3759 on September 8. On Monday, that rally reached 1.42928, right near the 61.8% retracement level of the longer-term move down from the early February 2025 high price (see the chart below).
Sellers leaned against that resistance, defined their risk, and pushed the price lower.
Yesterday, the correction lower gained momentum after the price tested and then broke below its rising 100-hour moving average (blue line on the chart below). That break gave sellers another reason to press to the downside.
However, the buyers had a level to lean against too.
After the price decline further, the decline stalled near 1.4207 late yesterday and into today’s Asian-Pacific session, where the rising 200-hour moving average provided support. Buyers stepped in against that level and have since pushed the price back above the 100-hour moving average, currently at 1.42426. The current price is near 1.4250. The bias in the short-term is more bullish above that moving average.
The chart below shows how those technical levels have helped define the battle between buyers and sellers.
Buyers survive the correction. Can they build on the bounce?
The bounce from the 200-hour moving average kept the broader bullish trend intact. Moving back above the 100-hour moving average gives buyers more control in the shorter term. Now they need to hold that break.
Stay above 1.42426, and the next upside target is Monday’s high and the 61.8% retracement near 1.42928. Getting above that resistance—and staying above it—would open the door for another extension higher.
Conversely, a move back below the 100-hour moving average with momentum would weaken the recovery and put the rising 200-hour moving average back in focus. That moving average is now at 1.42146 and continues to move higher.
With buyers having successfully defended it during the latest correction, its importance has increased. A break below would give sellers more control, with Friday’s low at 1.4192 followed by the swing area near 1.4150 becoming the next downside targets.
Key technical levels
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1.42928: Monday’s high and the 61.8% retracement. The ceiling buyers need to break.
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1.42426: The 100-hour moving average. The near-term barometer for buyers and sellers.
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1.42146: The rising 200-hour moving average. Key support after holding the latest correction.
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1.4192: Friday’s low.
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1.4150: The next downside swing area.
There is a good trading lesson in this price action. Sellers leaned against the retracement resistance. Buyers leaned against the 200-hour moving average. Both had a clear reference for defining and limiting risk: hold the level, and look for a rotation; break it, and reassess.
Between those extremes, the 100-hour moving average is the barometer. Stay above it, and the buyers retain the near-term advantage. Move below it, and the sellers get another shot at testing support.
This article was written by Greg Michalowski at investinglive.com.