Featured Trade USDCAD minor downtrend remains intact

Short-term technical outlook on USD/CAD (Wed 30 Jan)

Key elements

• Since its failure bullish breakout high of 1.4690 printed in Jan 2016, the price action of the USD/CAD has been evolving within a major/primary descending channel with its upper boundary acting as resistance at 1.3660.  Over the medium-term horizon since its Sep 2017 low of 1.2061, the pair has been trading within a complex “Expanding Wedge” range and it staged a recent bearish reversal from the “Expanding Wedge” upper boundary/resistance on 02 Jan 2019 (see weekly chart).
• In the short-term, the pair has evolved within a minor descending channel in place since 02 Jan 2019 swing high of 1.3662 Its recent rebound from its 1.3201 low of 28 Jan 2019 has stalled right below the former minor trendline support from 09 Jan 2019, the upper boundary of the minor descending channel and the 61.8% Fibonacci retracement of the recent slide from 24 Jan 2019 high to 28 Jan 2019 low. These observations have formed a confluence level of 1.3310, the key short-term resistance (see 1-hour chart).
• The 1-hour Stochastic oscillator has dipped down and it is now coming close to an extreme oversold level which suggests that the pair may stage a minor bounce first towards 1.3285 intermediate resistance (minor range resistance from 28/30 Jan 2019).
• The next significant near-term supports rest at 13180 (09/11 Jan 2019 minor swing  low) and 1.3110/3075 (the median line of the minor descending channel & Fibonacci expansion cluster (see 1-hour chart).

Key Levels (1 to 3 days)

Intermediate resistance: 1.3285

Pivot (key resistance): 1.3310

Supports: 1.3180 & 1.3110/3075

Next resistances: 1.3370 & 1.3420

Conclusion

If the potential imminent minor rebound can hold below the 1.3310 short-term pivotal resistance, the USD/CAD may stage another potential bearish impulsive down move to target the next supports at 1.3180 and 1.3110/3075 next.

On the other hand, a clearance above 1.3310 negates the bearish tone for another leg of corrective rebound to retest 24/25 Jan 2019 minor swing high area of 1.3370 and even the next intermediate resistance at 1.3420 (close to 50% Fibonacci retracement of the recent decline from 02 Jan 2019 high to 09 Jan 2019 low).

Charts are from eSignal