USD/CAD Consolidation Breakdown And Downtrend Continuation

Price action on USD/CAD, a daily chart of which is shown, has broken down decisively below its previous consolidation, continuing the downtrend in the pair that has been in place since the long-term high was reached in early March. This occurs in an environment where the U.S. dollar has been weakening and gold has just hit an all-time high. This also occurs after USD/CAD made a false breakout above a key downtrend resistance line extending from the pair’s long-term high above 1.3000. Currently, a downtrend continuation has been tentatively confirmed, with price approaching a support region just above 1.0400. A breakdown below this 1.0400 support should target immediate further support in the key 1.0300 price region. In the event of a further continuation of the downtrend, the key downside target resides around parity in the 1.000 region. Upside resistance within the context of the current downtrend resides around the general 1.0600 region, the approximate bottom of the previous horizontal consolidation.

(Chart courtesy of FX Solutions’ FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

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