The USDCAD finally made a run to the downside and away from the RED BOX that and confined the pair going back to September 27 (see chart above).
The pair waffled above and below the low of that red box over 3 trading days until breaking to the downside yesterday. The low price for the day reached a somewhat modest target at 1.34078 area. The level represented a swing high going back to September 21 and a swing low on September 22.
That level was broken and the price moved to a low of 1.3381 yesterday before snapping back higher.
In trading today, both the Asian and early European session, found support buyers against the 1.34078 level (the lows came in at 1.3412). Those holds, increases the areas importance going forward (see green numbered circles in the chart above), and make it a barometer for both the buyers and sellers in the short-term.
A break below – with momentum – would have traders looking toward the low from yesterday, followed by the 50% midpoint of the move up from the August 11 swing low (not shown in the chart above). That midpoint level comes in at 1.3352. Move below the midpoint, and it opens the door for even further declines with the 100 average down at 1.32183 the potential target down the road.
Conversely, holding the 1.34078 level, and revisit of the 38.2% retracement and low of the red box swing area near 1.3500 cannot be ruled out.
Up and down price action today. The break out of the RED BOX near 1.3500 to 1.3510 has to be respected, but the price action shows some cause for pause near 1.34078 – 1.3412 as well.
The battle lines are set.