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Technical Analysis – USDCAD retreats towards descending channel
USDCAD climbed above the short-term descending channel earlier today in the four-hour chart but failed to jump above the 1.2780 resistance, returning lower. The directionless Ichimoku lines and the steadied cloud further reflect the weakness in the price momentum. Meanwhile, the RSI is heading south but is still holding comfortably above its neutral threshold of 50, whereas the Stochastic is moving higher after the bullish cross within its %K and %D lines, endorsing the rebound off 1.2590.
Initial support to downside movements could commence within the zone of the cloud, where the 40- and 20-period simple moving averages (SMAs) hold, around 1.2710 and 1.2690 respectively. Diving beneath this, the 1.2590 barrier may also attempt to halt further loss of ground.
If buying interest resurfaces, resistance may come from a trench of peaks, from 1.2780 to 1.2800. Overcoming this boundary, the price may retest the 1.2835 barrier ahead of the 1.2955 peak, taken from the high on December 2020.
In brief, the very short-term bias is looking neutral-to-bullish above the SMAs and the cloud. A break either above 1.2800 or below 1.2590 could reveal the next direction in the price.