USD/CAD H4 – Support pressure might be escalating

The USD/CAD currency pair, on the H4 time-frame, was in an upward trend until the 14th of November when a higher top was recorded at 1.32706. Supply overwhelmed demand and the upward move was negated.

A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 1.32557 and 1.32706. This could have alerted technical traders to a possible technical reversal.

After the high at 1.32706, the price broke through the 15 and 34 Simple Moving Averages, the Momentum Oscillator broke through the zero baseline into bearish terrain and a Three Black Crows Candlestick pattern formed. This further confirmed a possible technical price reversal or early stages of a possible new trend.

A possible critical support level formed when a lower bottom was recorded at 1.32192 on the 15th of November. Buyers tried to push the market higher but a possible resistance level formed on the same day at 1.32516 that could not be breached and more sellers entered the market.

Later on the 15th of November the USD/CAD broke through the critical support level at 1.32192 and a short position was triggered. Three possible price targets were projected from there. Attaching the Fibonacci tool to the lower bottom at 1.32192 and dragging it to the possible resistance level at 1.32516, the following targets was calculated. The first target was anticipated at 1.31992 (161 %). The second price target can be predicted at 1.32668 (261.8%) and the third and final target may be expected at 1.31144 (423.6%).

If the resistance level at 1.32516 is broken, the scenario is invalidated and will need to be re-evaluated.

As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the USD/CAD currency pair on the H4 time-frame will remain bearish.

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