USD/CAD traded lower during the European morning Monday after it hit resistance once again near the 1.3080 barrier. The pair appears to be stuck within a short-term range between that level and the 1.3025 support since the 25th of the month, but in the bigger picture, it is trading below the prior medium-term uptrend line taken from the low of the 17th of April. Thus, we would consider the near-term outlook to be negative for now.
If the bears are strong enough to drive the battle lower and break the 1.3025 support, then we may see them aiming for our next support territory of 1.2960. Another break below that zone could extend the declines towards the 1.2920 barrier, defined by the low of the 8th of June.
Our short-term oscillators support somewhat the case for this pair to continue trading south in the near future. The RSI, already below its 50 mark, has turned back down. The MACD is negative, above its trigger line, but shows signs that it could turn down as well. It could fall below its trigger line soon.
On the upside, if the bulls manage to take charge from current levels and push the rate above 1.3080, then we may see them initially aiming for the 1.3115 hurdle. Another break above that level could pave the way for the 1.3170 resistance or the prior uptrend line. That said, we would still see a decent chance for the bears to jump in from that zone and thus, we would treat such a recovery as a corrective rebound.
We would like to see a clear and decisive move above 1.3190 before we abandon the bearish case. Such a break would bring the rate back above the medium-term uptrend line and could set the stage for extensions towards the 1.3265 level.
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