USD/CAD has pulled back from a high near 1.3892 after buyers failed to extend the rally to a new high. The pair now approaches a cluster of moving-average support between 1.38376 and 1.38430, a level traders are watching as the next short-term battleground.
USD/CAD bottomed last Friday at 1.37315 before gapping higher over the weekend after trade talks between the United States and Canada soured. The deterioration in trade relations fueled upside momentum, pushing the pair back above the 100-hour, 200-day and 200-hour moving averages.
Rally stalls just short of a new high
The advance continued yesterday, with the pair breaking above the 38.2% retracement of the decline from the July 28 high at 1.3882, a move that took the rally as far as 1.38922. Buyers, however, could only push the price to 1.3891 today — just short of yesterday's high.
That failure to make a new high, followed by a slide back below the 38.2% retracement at 1.3882, gave sellers the go-ahead to push the pair lower. The price has since fallen to a low of 1.3853 and is now approaching the moving-average cluster between 1.38376 and 1.38430.
Moving-average cluster now the key barometer
That cluster — made up of the rising 100-hour moving average, the 200-day moving average and the 200-hour moving average — has become the short-term barometer for buyers and sellers. If it holds, buyers would retain a puncher's chance of restarting the move higher, though they would still need to reclaim the swing area between 1.3868 and 1.3877, then the 38.2% retracement at 1.3882, to rebuild the bullish bias.
Beyond those levels, buyers would need to break the highs from yesterday and today near 1.3892. The more important upside hurdle remains the 100-day moving average at 1.39136, and buyers need to get above that level and stay there to take firmer control.
Source: Investinglive
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