USD/CAD False Breakdown With Huge Separation! What Now?

USD/CAD dropped again in the short term as the Dollar Index has plunged on Friday around Powell's dovish remarks. The pair has touched a demand zone, a support area, so we'll have to wait for a fresh signal before taking action.

The pair has increased a little in the last hours even if the US Pending Home Sales has registered a 1.8% drop versus 0.5% growth expected and after the Canadian Current Account was reported at 3.6B compared to 1.5B expected. USD/CAD is almost to register a false breakdown with great separation below the immediate support levels signaling a potential bullish momentum.

It's premature to talk about a potential long or short opportunity. Most likely, the US data will drive the price during the week. You'll have to keep an eye on the economic calendar.

USD/CAD Back At Support!

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As you can see on the H4 chart, USD/CAD has found support below the descending pitchfork's median line (ml) and under 1.2590 static support. USD/CAD failed to stabilize under the median line (ml) in the previous attempts signaling strong demand.

Technically, only a new lower low, a valid breakdown below 1.2573 today's low could really activate a downside movement. Stabilizing above the median line (ml) and beyond 1.2590 could signal a potential rebound towards the weekly pivot point (1.2673).

Forecast!

We'll have a short opportunity only if USD/CAD drops and closes under 1.2573 today's low. The next downside target is seen at the weekly S1 (1.2514).

The material has been provided by InstaForex Company - www.instaforex.com

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