After an extended leg lower, USD/CAD is now posting signs of basing near major support at the 1.3815–1.3800 zone. The sellers appear to be exhausting, and bulls may be preparing for a counter-trend rally or even a shift in structure if momentum aligns.
🔍 Technical Setup:
Key Support Holding: Price is respecting the 1.3815–1.3800 area, a level that previously acted as resistance and is now serving as strong support.
Stochastic Momentum: Stochs are deeply oversold and beginning to curl upward, signaling early bullish momentum and potential for a reversal move.
Candlestick Behavior: Multiple small-bodied candles with long lower wicks at this level suggest buyer absorption and fading bearish strength.
EMA Watch: The 8 & 36 EMAs are still bearish, but price consolidating below them could set up a mean reversion play targeting the 1.4180 zone, where EMAs and prior structure converge.
⏫ Bullish Bias Drivers:
Daily Bullish Divergence Watch: Price is printing lower lows, but momentum is failing to confirm — potential for bullish divergence to support a bounce.
Clear Rejection of Bear Continuation: Despite bearish trend structure, there’s no daily close below 1.3800 — which could mean a bull trap failed to trigger.
Measured Move Potential: If this bounce gains traction, a swing move into the 1.4180 resistance zone (former structure and EMA confluence) is on the table.
🌐 Macro Fundamentals Backing a Bounce:
DXY Softness: The U.S. Dollar Index is weakening amid softer economic data and renewed trade concerns. If this cools off, we could see short-term strength as USD rebalances.
Canadian Dollar Sensitivity: Oil prices are high, but extended gains could stall — offering USD/CAD a window to lift off this oversold zone.
Positioning and Sentiment: Bearish sentiment on USD/CAD is becoming crowded — potential for a short squeeze if momentum flips.
🔍 Technical Setup:
Key Support Holding: Price is respecting the 1.3815–1.3800 area, a level that previously acted as resistance and is now serving as strong support.
Stochastic Momentum: Stochs are deeply oversold and beginning to curl upward, signaling early bullish momentum and potential for a reversal move.
Candlestick Behavior: Multiple small-bodied candles with long lower wicks at this level suggest buyer absorption and fading bearish strength.
EMA Watch: The 8 & 36 EMAs are still bearish, but price consolidating below them could set up a mean reversion play targeting the 1.4180 zone, where EMAs and prior structure converge.
⏫ Bullish Bias Drivers:
Daily Bullish Divergence Watch: Price is printing lower lows, but momentum is failing to confirm — potential for bullish divergence to support a bounce.
Clear Rejection of Bear Continuation: Despite bearish trend structure, there’s no daily close below 1.3800 — which could mean a bull trap failed to trigger.
Measured Move Potential: If this bounce gains traction, a swing move into the 1.4180 resistance zone (former structure and EMA confluence) is on the table.
🌐 Macro Fundamentals Backing a Bounce:
DXY Softness: The U.S. Dollar Index is weakening amid softer economic data and renewed trade concerns. If this cools off, we could see short-term strength as USD rebalances.
Canadian Dollar Sensitivity: Oil prices are high, but extended gains could stall — offering USD/CAD a window to lift off this oversold zone.
Positioning and Sentiment: Bearish sentiment on USD/CAD is becoming crowded — potential for a short squeeze if momentum flips.
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