- USD/CAD bears are taking on a double bottom near 1.3450 support area.
- Bears eye a 61.8% Fibonacci retracement near 1.3415 should the double bottom (DB) be breached.
USD/CAD is eating into the bullish rally’s tracks from yesterday’s business with 1.3450/30 eyed as a potential support structure in what has been a choppy descent from above 1.3500 on the day so far. The following illustrates the downside bias prior to the next wave of demand to the upside should the US dollar bulls be motivated by a discount in price in the coming sessions and days ahead.
USD/CAD prior analysis
It was stated at the start of the week, in the following analysis, USD/CAD Price Analysis: Bulls eye a break of 1.3450 for a look in at the 1.35 area, that the price was embarking on a correction but 1.3450 had to give out first:
There was a price imbalance that had been left behind since the major sell-off at the start of the year. There was a thesis of mitigation towards 1.3550.
As illustrated, the bullish accumulation schematic played out, with the price respecting the spring and a subsequent break of resistance near 1.3450 leading to a drive to mitigate the price imbalance, albeit not in its entirety.
At this juncture, it is a matter of wait-and-see, but the bias is bullish while above the old resistance:
USD/CAD H4 chart
The price is forming an M-formation on the 4-hour chart. The pattern is a reversion set-up for the sessions ahead where the price would be expected to move back into the bearish impulse and target the neckline near 1.3490. However, the downside may not have been concluded as of yet, although there is a current deceleration near 1.3450 and a 38.2% Fibonacci retracement area of the prior bullish leg’s range. Lower time frames can be assessed to gauge whether the bears are throwing in the towel which might prompt a move by the bulls in the day ahead:
USD/CAD 15-min chart
As per the 15-min chart, there are two price imbalances (PIs) that could be mitigated on the way to a 61.8% Fibonacci retracement near 1.3415 should the double bottom (DB) be breached.