May 12, 2021 14:45:37

USD/CAD is heading for its fourth straight monthly decline and sixth consecutive weekly loss. The monthly USD/CAD timeframe shows we have now reached a major level on the long-term chart at 1.2061 which is the September 2017 low. The pair peaked in 2016 at 1.4690 and again at 1.4667 in March last year and since then prices have traded lower, accelerating in the last few months with a couple of strong closes, notably through the 50% retrace level of the 2020 to 2012 move at 1.2161.

We should now expect some reaction to hitting such a major level although long-term oscillators are still bearish and the RSI is not oversold. Prices are now touching the lower Keltner band which last happened in 2007. If the pair can consolidate and initially close the week below 1.2061, then the next objective is May 2015 low at 1.1919 before the 200-month SMA just below 1.17. Prices need to move above the January 2018 lows at 1.2247 to see a change in the long-term bearish momentum.

We can see on the USD/CAD daily chart that prices have accelerated lower this month after the break of the mid-March low at 1.2365. Bearish oscillators show a strong trend for lower prices which often tend to cut short any longer-term rallies. Resistance lies at the long-term retrace level at 1.2161 and with prices through the lower Keltner band, some retracement or consolidation should be expected with an easing of severly oversold conditions overdue. If this does take place in the next few days, then the bearish long-term trend could reassert itself and so an opportunity to get short.