USD/CAD H4 Timeframe: Based on the USD/CAD chart on the H4 timeframe, the current price movement is showing a transition phase after previously being in a fairly strong downtrend. The price structure since mid-January has shown significant selling pressure, marked by a series of lower highs and lower lows. The sharp decline to the 1.3480 area reflects strong bearish momentum and marks the area as important medium-term support. After reaching this low, the price began to show signs of recovery. The rebound from the 1.3480 area was followed by the formation of a gradual upward trend, with the price starting to create higher lows. This indicates that selling pressure is weakening and buyers are starting to re-enter the market. This increase is also evident in the prices successful breakout and hold above the 100-day moving average (blue line), which often serves as an indicator of medium-term momentum. Currently, the price is moving around the 1.3700 level, which is a key resistance area and is close to the 200-day moving average (red line). The 200-day moving average (MA) remains downward sloping, indicating that the medium- to long-term trend remains under bearish pressure. Therefore, the 1.3700–1.3730 area is a crucial zone that will determine the direction of the next movement.
If the price is able to break through and maintain above the 200-day moving average (MA) with a strong closing candle, it will signal an early change in the trend structure from bearish to neutral or even bullish. In this scenario, the potential for further upside towards the next resistance level in the 1.3780–1.3845 area will be even greater. A breakout of this resistance will also confirm the formation of a more solid trend reversal pattern. Conversely, if the price fails to break through the 1.3700–1.3730 area and shows strong resistance, the pair will likely return to a consolidation phase or even resume its previous downtrend. Resurgent selling pressure could push the price down towards the nearest support level at 1.3615. If this level is breached, the next downside target will be the 1.3535 area, leading to a retest of the main support level around 1.3480. From a market structure perspective, the current movement is forming an upward consolidation pattern after a sharp decline, often referred to as a correction in a downtrend. This condition indicates a temporary balance between buyer and seller power, as the market seeks a catalyst to determine its next dominant direction. The upward slope of the 100-day moving average (MA) reflects increasing short-term bullish momentum. However, as long as the price remains below the 200-day moving average (MA), medium-term pressure remains cautious regarding the potential continuation of the bearish trend. Therefore, confirmation of direction will depend heavily on the price reaction to the current key resistance zone. Overall, USD/CAD is in a direction-determining phase around a key resistance area. A valid breakout above the 200-day moving average (MA) would open the door to a bullish trend reversal, while failure to break through this area could trigger renewed selling pressure. Given this situation, primary attention should be focused on the price reaction around the 1.3700–1.3730 level, as movement within this zone will likely determine market bias in the coming sessions.
