03.08.202017:41 Forex Analysis & Reviews: Short-term technical analysis of USDCAD for August 3, 2020

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USDCAD remains in a bearish short-term trend. Our last signal was given at the break of 1.35 and since then we remain bearish. Price continues to make lower lows and lower highs. Price is inside a bearish channel and as long as we are trading below 1.3475-1.35 we remain bearish.

Blue lines- bearish channel

Red rectangle- horizontal resistance

USDCAD is trading below key resistance. A rejection here will increase the chances of a move towards 1.3350 and most probable a break below this key support level. So 1.35 resistance by the channel and the horizontal area is as important as 1.3350. If 1.35 fails to break then more bears will put pressure on price and will eventually break 1.3350. What will we see when and if 1.3350 breaks?

Red rectangle - key support

Blue lines - size of decline if support fails to hold

If 1.3350 fails to hold I expect USDCAD to move towards 1.30 at least. This would be a bearish signal and I would increase my bearish exposure. On the other side, support is very close to current price, this means that any one wanting to make a counter trend trade, current price level provides good risk reward ratio in case price reverses from current levels and turns upwards above 1.35. I prefer to be bearish below 1.35 and not bet against the trend.

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