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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; Fibonacci retracements in grey; 50-period simple moving average in light blue.)
After plummeting for three straight trading days, bearish price action on USD/CAD, a daily chart of which is shown, appears to be taking somewhat of a breather as of yesterday. The current fall was initiated after price retraced up to around a key 38.2% Fibonacci retracement level (the high-to-low retracement span being measured from the fourth test of the 1.3000 high in March to the 1.0800 lows hit in early June).
Currently, bullish corrections notwithstanding, the pair appears to be targeting the 1.0800 lows once again after breaking down significantly below the prior support in the 1.1450 region. Any breakdown below 1.0800 would confirm a major downtrend continuation, with several further support targets to the downside, including 1.0550 and 1.0300.
Upside resistance within the current bearishness resides in the noted 1.1450 price region.
By James Chen, chief technical strategist, FX Solutions
