USD/CAD Remains Stuck Between 2 MAs

The 100 SMA rejected USD/CAD last week, but the 50 SMA is holding as support on the daily chart

Skerdian Meta•Friday, October 9, 2020•1 min read

Let's see if the price will bounce to the 100 SMA again

The USD/CAD surged around 15 cents higher during the initial coronavirus panic, as traders turned to the USD as a global reserve currency, while, as a risk currency, the CAD declined. The bearish move in crude oil also helped push the CAD lower, since the CAD is closely correlated to oil prices.

But after a doji candlestick on the daily chart, below 1.47, which is a bearish reversing signal after the climb, the trend in the USD/CAD shifted. From then, the pair remained bearish until September 1, when it briefly dipped below 1.30. Then the price retraced higher, climbing more than 400 pips, as the USD buyers returned.

But, it isn’t clear whether this is just a retrace before the bearish trend resumes again, or whether this is a proper reversal. Moving averages will decide that, as this pair has been bouncing between them in the last two weeks. The 50 SMA (yellow) is providing support on the daily chart, and the 100 SMA (green) is providing resistance.

Sellers were trying the 50 SMA yesterday, after the 100 SMA rejected the price, but the 50 SMA held. If the 50 SMA and the support at 1.3250, where this moving average stands, should break, then the bearish trend will become active again. If the price bounces and breaks above the 100 SMA, then the buyers will take charge. So, until one of these MAs breaks, the trend will be unclear.

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.