Over the weekend we looked at what appeared to be a 4-hour ascending channel on the USDCAD. The pattern has taken on a different shape since then, but there’s no denying that yesterday’s session broke support.
Not only did seller’s take out channel support but they also broke the key horizontal level at 1.2660. You can see how this level has served as a pivot since August 4th.
On top of that, 1.2660 is also the June low from last year and played a critical role in February of 2015. As such, it may be a good area to watch for a sell signal should we get a retest over the next few sessions.
Key support comes in at the July low of 1.2420. A daily close below that would pave the way for a move toward 1.2180 followed by the May 2015 low at 1.1920.
Alternatively, a close back above the 1.2660 area would negate the bearish bias and re-expose Tuesday’s high at 1.2777. But even then the pair would still be contained within this ascending channel that formed following a 1,400 pip drop between May and July.
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