USDCAD Analysis The USD/CAD daily chart has been following a strong downtrend with lower highs and lower lows since March 2025. This steady downtrend began after a sharp decline from a peak near 1.4770 in April 2025, with no support above the 1.4600 resistance level. The downtrend has formed within a narrow descending channel, with the price gradually experiencing downward pressure at each major Fibonacci retracement level. This latest structure shows a full Fibonacci retracement range from the peak at 1.4770 to the current low near 1.3620. The price is currently hovering around the 0.0% retracement level, typically associated with a reversal pattern. The long-term uptrend that continued from early 2023 to late 2024 has finally collapsed. A major ascending trendline connecting the January 2023, September 2023, and April 2024 lows was recently broken, and prices closed below this line in the last week of May 2025. This breakout indicates a significant structural gap supporting a reversal of the long-term downtrend. This breakout also coincides with the lower boundary of the descending channel, making the area between 1.3620 and 1.3570 a significant support for short-term price action. In recent days, prices have struggled to stabilize near their current lows. The candles that formed in recent days were extremely narrow, with long lower wicks and thin bodies reflecting hesitation and weak bearish momentum. This is often interpreted as a signal of a possible short-term trend reversal, or at least a temporary breakout of the downtrend. The latest daily candle closed slightly higher, then became a smaller candle after several selling sessions. Despite having two wicks at each end, the closing price is slightly higher than the previous day, suggesting cautious buying from the monthly lows. This new candlestick, which is formed in parallel with multiple crossovers and a turning top, indicates a weak downtrend and a potential sell-off. In terms of price, the next support is currently at 1.3570, which coincides with the lower limit of the channel and the next psychological resistance below the current price. If sellers regain control and break above 1.3570, the pattern could eventually enter a continuation zone and reach 1.3450 or even 1.3350. These levels correspond to the historical reversal zone last reached in the third quarter of 2023. Meanwhile, the immediate resistance is located between 1.3700 and 1.3730, at which point the price will encounter not only the horizontal resistance line, but also the dynamic resistance line of the descending channel. A break of this zone would open the way to the 23.6% Fibonacci retracement level at 1.3785, which coincides with the 38.2% level and the 1.3880 area. The MACD indicator remains below the signal line and in the negative territory. However, the chart bars are sloping downwards, indicating a possible change in momentum. This movement confirms the recent candlestick pattern, which indicates a possible recovery or sideways movement. The Relative Strength Index (RSI) is currently approaching the low and oversold territory at 31.31. This indicates that the bearish momentum has overstepped its limits and the market is expecting a correction or corrective uptrend. The Stochastic indicator confirms this assessment by pointing at 19.07. This figure is oversold and sloping upwards. This is a typical early sign of a reversal in a short-term uptrend. An examination of the trend structure indicates a possible recovery. The current range forms a pressure point where the previous upper trend line meets a downward Fibonacci projection. These convergences usually mark critical points during sustained price increases and recoveries. Given the magnitude and angle of the recent decline, any recovery could be strong and corrective, especially if driven by fundamental factors like oil prices and dollar sentiment. In short, the USD/CAD pair remains in a dominant downtrend following a sharp decline from multi-month highs reached in April 2025. Following a sharp decline during which several indicators pointed to oversold conditions, the USD/CAD pair is currently trading sideways near key technical support levels. The latest candlestick pattern confirms the weakness of the previous bearish pattern, suggesting a potential short-term recovery. However, the overall trend remains downward, and the USD/CAD pair is likely to test the downside until it recovers to 1.3700 and remains above lower resistance. Unless an upside breakout of 1.3780 and 1.3880 occurs, the current uptrend is likely to enter a corrective phase. Such a move could serve as a short-term reversal signal.
