Last week, the USD/CAD pair fell sharply, and although the downward momentum may have slowed down a bit over the past couple of days and hours, the downtrend is still intact. Trends are fast, directional, and tend to go further than traders expect or believe. As a result, if you want to buy on a dip, it is important to either rely on a major support level, or wait for the price action to extend – in this case – back above the broken level.
In USD/CAD, the pair has broken below the 1.3455-1.3477 swing zone. Within that zone is the 61.8 retracement level. It is above that. It would take a move above that zone to tempt me to buy. That could happen on a move above 1.3455, but if the momentum doesn’t hold, I’m out.
On the downside, the swing zone between 1.3398 and 1.3414 is the next downside target. I would only buy until this zone is reached or approached. However, I would place a stop below the 1.3398 level.
In general, sellers remain in control. So this is the preferred trading bias. However, at some point, there will be a recovery. So be careful but make sure to respect the trend if you want to buy (i.e., place a meaningful stop like the one shown above)
USDCAD currency pair is trending downwards