- USD/CAD prints losses on Wednesday in the Asian session.
- Bulls fail to cross 1.2550 decisively and surrender all the gains.
- Momentum oscillator holds onto overbought zone with a neutral stance.
After testing the high of 1.2575 in the previous session, the USD/CAD pair subsidies all gains on Wednesday. The pair opened higher albeit fizzled out rather quickly to trade lower.
At the time of writing, USD/CAD is trading at 1.2521, down 0.12% for the day.
USD/CAD daily chart
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On the daily chart, the USD/CAD pair has formed a Head & Shoulders ( H&S) technical pattern, which is a bearish reversal formation. A break of the neckline confirmed near 1.2515 resulted in quick downside momentum.
If price breaks intraday’s low, it could move lower toward the previous day’s low of 1.2489.
The receding Moving Average Convergence Divergence (MACD) indicator reflects the opportunities for further downside movement. Any downtick in the MACD would bring the 1.2460 horizontal support level back into action.
Next, the bears would capture the low of July 30 at 1.2422.
Alternatively, if price breaks the 20-day Simple Moving Average (SMA) at 1.2547, which coincides with the neckline of the H&S pattern would reverse the downside trend.
A daily close above the mentioned level would invite USD/CAD bulls to test the psychological mark of 1.2600.
The next area of resistance for the market participant would be the July 16 high of 1.2620 followed by the 1.2675 horizontal resistance level.