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  • USD/CAD risks falling back to Wednesday’s low of 1.3327.
  • Wednesday’s doji candle is indicative of bull fatigue. 

USD/CAD is mildly bid in Asia and looking to cross above the psychological hurdle of 1.34. A breakout, however, could be short-lived, as Wednesday’s doji candle is indicating bull fatigue. 

USD/CAD produced a doji candle on Wednesday, which occurs when both bulls and the bears struggle to lead the price action, resulting in a two-way business and a flat close. It is widely considered a sign of indecision in the market place. 

However, in USD/CAD’s case, the candle mainly represents buyer exhaustion. After all, the bulls failed to produce a strong green candle by capitalizing on Bank of Canada’s 50 basis point rate cut. 

Alongside that, the 14-day relative strength index has diverged in favor of the bears. 

Additionally, a bearish reversal doji pattern, as represented by last Friday’s doji and Monday’s big drop, is still valid. 

So, the odds appear stacked in favor of a downward move. The pair could challenge Wednesday’s low of 1.3327. Acceptance under that level would expose the daily chart ascending trendline support, currently at 1.3275. 

On the higher side, a convincing close above Wednesday’shigh of 1.3431 is needed to put the bulls in a commanding position. 

Daily chart

Trend: Bearish

Technical levels