The USD/CAD pair has continued its downward trend for the second consecutive day, trading around 1.3510 during Tuesday’s European session. Technical analysis reveals a falling wedge pattern forming during an uptrend, suggesting a potential resumption of upward price movement.
Despite this pattern, the 14-day Relative Strength Index (RSI) remains below the 50 mark, indicating that the bearish trend is still active. Should the RSI decline further toward the 40 level, it could signal an oversold condition for the USD/CAD pair, paving the way for a possible upward correction soon.
On the downside, the pair is approaching the lower boundary of the falling wedge at 1.3470. A drop below this level could intensify bearish sentiment and lead to a test of the six-month low at 1.3441, recorded on August 28.
Conversely, on the upside, the immediate resistance level is seen at the nine-day exponential moving average (EMA) of 1.3557, coinciding with the upper boundary of the falling wedge. A breakout above this wedge could diminish the bearish outlook, allowing the USD/CAD pair to challenge the resistance level at 1.3590, followed by the psychological barrier at 1.3600.
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