- A pullback towards 1.2900 may result in a responsive selling action.
- The 20- and 50-EMAs are on the verge of giving a bearish crossover.
- The RSI (14) has shifted into a bearish range of 20.00-40.00.
The USD/CAD pair is displaying back and forth moves in a narrow range of 1.2820-1.2846 in the Asian session followed by a sheer downside move. The greenback bulls have faced intense selling pressure after the asset failed to sustain above the psychological support of 1.3000.
A breakdown of the Rising Channel chart formation on a four-hour scale has shifted the asset into a negative trajectory. The asset has experienced a vertical downside move after slipping below Friday’s low at 1.2893. Usually, a steep bearish move is followed by a pullback, which is considered a selling opportunity for the market participants.
The 20- and 50-period Exponential Moving Averages (EMAs) at 1.2927 are going to display a bearish crossover for the first time in May, which could trigger a potentially bearish setup.
Meanwhile, the Relative Strength Index (RSI) (14) has already shifted into a bearish range of 20.00-40.00, which signals a bearish momentum ahead.
Investors should use a pullback towards the crucial resistance of 1.2900 as a selling opportunity. Formation of heavy short-buildup near the crucial resistance would drag the asset towards Tuesday’s low at 1.2819. Violation of Tuesday’s low would expose the asset to more downside towards May 5 low at 1.2713.
On the contrary, the greenback bulls could take back the charge if the asset surpasses the psychological resistance of 1.3000. This will drive the asset towards Thursday’s high at 1.3077, followed by the 13 November 2020 high at 1.3113.
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