USDCAD Retest Fails to Hold

The USDCAD market experienced a bullish breakout in February. A retracement followed to establish a retest upon the breakout. After a bounce off the previous resistance trendline, the price fell below the confluence zone.

Demand Levels: 1.3180, 1.2980, 1.2820

Supply Levels: 1.3520, 1.3690, 1.3880

USDCAD confluence level originated from the cross of the ascending and descending trendlines on the daily chart. The ascending trendline was anchored on the higher lows formed in January and August last year and also in February 2023. The swing lows were observed to have formed when the Stochastic was oversold. The Parabolic SAR had also signaled the halt of the pullback immediately after the formation of the swing lows.

The descending trendline was also anchored on the head and shoulders pattern, which formed the high in October, and the triple top pattern, which formed the lower high in December. Both the head and shoulders pattern and the triple top bearish patterns were formed when the Stochastic indicated the market was overbought.

The test of the confluence zone formed by the cross of the ascending and descending trendlines after the bullish breakout provided insufficient fuel for the price to fly. The price has dived below the confluence region. The retest on the ascending trendline may serve as resistance to shooting the price to the lower key level of 1.3180.