USD/CAD Bounces Off the 100 SMA as it Turns Into Support
[[USD/CAD]] has been quite bearish during October. The USD weakened last month as the economic data showed further weakness in the US economy, while the CAD strengthened, following Crude Oil’s climb higher after OPEC comments that they will reduce production further next year.
But, the decline stopped above 1.30. The zone above 1.30 seems to have turned into a solid support area since this pair has bounced twice from there in the last few months. So, the decline stopped above 1.30 and the price started retracing higher, but the 50 SMA (yellow) was preventing this pair from turning bullish on the H4 chart.
It didn’t last long though. The Bank of Canada sounded more dovish than expected on Wednesday and the Canadian GDP report came in pretty weak the next day. That gave USD/CAD the push it needed and the 50 SMA was broken and the price pushed above the 100 simple MA (green) and the 100 smooth MA (red).
But, this pair couldn’t close above the 100 smooth MA, which turned into resistance last week. Although, sellers couldn’t take things into their hands, because the 100 simple MA (green) turned into support immediately after that. Lows have been getting lower for USD/CAD, but they were following the 100 SMA which was moving lower as well.
Today, this pair is bouncing off the 100 SMA and it seems like USD/CAD will turn bullish now; stochastic was oversold a while ago and it has turned higher now. So, this pair is turning bullish now and it should reach the 100 smooth MA (red) at some point. When it does, we will observe the price action to see if the buying pressure will continue or whether this pair will reverse down.
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