USD/CAD has shown some strong support near 1.3000 area and is once again trading above 1.3100. However, Friday’s closing has formed a bearish engulfing pattern (refer to daily charts) and meanwhile the US Dollar Index is also keeping below 93.00 despite having back to back positive sessions. Apart from the selling pressure in the USD, the Canadian dollar is also getting support from the crude oil price that is stabilized above $41.
The pair’s intraday support level is at 1.3070. The near term resistance is at 1.3135 while another resistance is present at 1.3165. At the moment the USD/CAD may not fall drastically below 1.300 support but the on-going downtrend is likely to provide selling opportunities on small rallies. The moving averages are keeping above the current price, the SMA-21 is indicating resistance at 1.3165 and the SMA-50 is showing resistance at 1.3343. The lower Bollinger band supports a move until 1.3006 while the RSI is at 40 and may enter in a further bearish zone. A reasonable sell entry would be at 1.3135 with a target of 1.3075. A tight stop-loss for this trade would be just above the 1.3166 resistance level.
Today’s closing may determine whether the pair will decline further or enter into a consolidation period. Closing above 1.3180 would certainly favor the bulls however, closing below 1.3100 would once again raise the possibilities of testing 1.3000 support level.