- USD/CAD continued losing ground for the second consecutive session on Tuesday.
- The set-up supports prospects for a slide towards testing trend-channel support.
- Attempted recovery move is likely to run out of the steam near the 1.3200 mark.
The USD/CAD pair witnessed some heavy selling for the second consecutive session on Tuesday. The downward momentum dragged the pair to its lowest level since late January, around the 1.3155-60 region during the mid-European session.
Looking at the technical picture, the pair has been trending lower along a downward sloping channel over the past 1-1/2-month or so. The set-up points to a well-established bearish trend and supports prospects for further weakness.
Bearish technical indicators on the daily chart further add credence to the negative outlook. However, RSI (14) on 4-hourly/daily charts have moved on the verge of breaking into the oversold territory and warrant some caution for bearish traders.
Nevertheless, the pair still seems vulnerable to extend the bearish trajectory and aim towards challenging the trend-channel support, near the 1.3130 region. A convincing breakthrough will set the stage for a further depreciating move.
On the flip side, attempted recovery move will now be seen as an opportunity for bearish traders. This, in turn, might keep a lid on any meaningful upside, instead fizzle out rather quickly near the previous YTD lows, ahead of the 1.3200 mark.
That said, a sustained strength beyond might trigger a near-term short-covering move. The pair might then surpass the 1.3265-70 intermediate hurdle and aim to reclaim the 1.3300 mark before eventually darting to trend-channel resistance, around the 1.3330-35 region.
USD/CAD 4-hourly chart
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Technical levels to watch
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