Forex Technical Update
The USD/CAD failed on Friday to push through triangle resistance, and has since dropped to triangle support. With the market so close to the apex as seen in the daily chart, a break is imminent. Note the RSI reading in the daily chart is still above 40. A break below 40 means a break of bullish momentunm established last September. Really, it means a turn to bearish bias after a few months of congestion (where the RSI was stuck between 40 and 60).
To the downside, the first possible target is the 50% retracement along with other pivots near 1.0030. If the market stays below the apex of the triangle after a pullback, further downside can be expected, first to parity (1.0), then to 0.9880-0.99 (61.8% retracement and a previous pivot, near the 200 day simple moving average.
The 1H chart shows that the market is consolidating a bit after going from triangle resistance to support. The RSI dipped from above 70 to below 30. If price action fails to break above the 200 hour SMA, and the RSI reading holds below 60, and returns below 40, we can anticipate the bearish scenario, especially after a break below 1.0110. Otherwise, in the near-term, look for a correction toward 1.0190 (200 hour SMA). This would still within the bearish scenario, unless the rally breaks above 61.8% retracement at 1.0216, in which case we should look at triangle resistance again.