USD/CAD H4 Timeframe: On the H4 chart of the USD/CAD pair, the market structure still reflects a moderate bullish trend, although a short-term correction or consolidation phase is beginning to appear. Previous price movements have shown a fairly strong upward momentum since mid-March, consistently forming higher highs and higher lows. This momentum then brought the price closer to a strong resistance area around 1.3950–1.3960, which appears to be a significant resistance zone. Looking at the moving averages, the 100-day moving average (MA) is currently above the 200-day moving average (MA), which classically indicates a bullish trend. Furthermore, both moving averages are still sloping upward, indicating that structural buying pressure has not completely dissipated. However, the price has now fallen close to and even briefly breached the 100-day moving average (MA), indicating that bullish strength is weakening in the short term. The price reaction to the 100-day moving average (MA) is key. Previously, the 100-day moving average (MA) served as dynamic support during the upward phase. When the price begins to break through and move below it, this often signals the beginning of a change in momentum or at least a deeper retracement phase. If the price fails to regain ground above the 100-day moving average (MA), the potential for a decline towards the 200-day moving average (MA) in the 1.3780–1.3800 area becomes increasingly open.
In terms of horizontal support and resistance, the 1.3870–1.3880 area now serves as the closest resistance after previously acting as support. This is an important zone as it was seen as a consolidation area before the latest decline. As long as the price remains below this level, selling pressure is likely to remain dominant in the short term. Above it, the next strong resistance lies around 1.3950, which is the most recent high and a significant supply area. Meanwhile, the closest support lies around 1.3820–1.3830, which is currently being tested. If this level is broken with strong confirmation, the decline could potentially continue towards the next support area at 1.3740–1.3750, which previously served as a consolidation point before the bullish breakout. This area is further strengthened by its proximity to the 200-day moving average (MA), suggesting a significant price reaction if reached. Overall, current conditions point more towards a correction phase within a broader bullish trend. As long as the price remains above the 200-day moving average (MA), the medium-term bias can remain bullish. However, in the short term, the market structure is beginning to show signs of weakening, particularly if the price remains below the 100-day moving average (MA) and fails to reclaim the 1.3870 resistance level. Therefore, the scenario to watch out for is the possibility of a deeper pullback towards the 200-day moving average (MA) before the market determines its next direction. A strong rebound from the 200-day moving average (MA) would indicate a potential continuation of the uptrend. Conversely, a decisive breach of the 200-day moving average (MA) could signal a larger trend change to the bearish side.
