USDCAD crashed below the 2018 trough of 1.2248 on Thursday, stretching its long-term downtrend towards the critical 1.2150 – 1.2060 zone, where the price bottomed back in 2017.
A rebound, or at least a sideways trading, cannot be ruled out in the short term as the RSI is looking set to change course in the oversold area. On the other hand, the Stochastics, although below the 80 oversold mark, show no sign of strength, while the MACD continues to weaken in the negative area, suggesting that the latest bearish cycle still has some room to run.
In terms of trend, the recent deviation between the 20- and 50-day simple moving averages (SMAs) hints at the continuation of the downward trajectory.
A sustainable move below 1.2060 could trigger a new selling wave towards the important level of 1.1920. Any violation at this point would snap the six-year-old range area, likely bringing the 1.1800 number next under the spotlight.
Should the bulls take over, immediate resistance could develop within the 1.2265 – 1.2300 congested area. Crawling higher, the price may attempt to cross above the 20-day SMA and the 1.2400 barrier, while not far above, the former support region of 1.2460 could block the way towards the 50-day SMA and the tough descending trendline seen around 1.2500.
Summarizing, the negative momentum in USDCAD could slow pace in the short-term, though signals for a trend reversal remain absent.