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Fan Yang

USD/CAD in a Bearish Continuation Breakout

The US Dollar has been softening up against the Canadian Loonie. USD$CAD price action is signaling a continuation of this trend in September.

USDCAD Daily Chart

(click to enlarge)

Lower Highs and Lows:
- The most apparent sign of a bearish market is lower highs and lower lows. 
- It looks like the major highs and lows in 2019 show this bearish dynamic.
- Furthermore, we should note that the bearish price action in June broke below a rising channel support from 2018 before it made a new 2019-low.
- Then, price rebounded, but made another lower high before topping.
- There was an August consolidation that kept USD/CAD mostly under 1.3350.
- But there was a common support around 1.3250. 
- Last week, price broke below this support as well as a rising trendline from July. 
- This suggests bears are still in charge, and that a bearish swing could be developing.
- In this scenario, I would look for a test of the 1.3025 support area. 
- A break below 1.30 then would open up the 1.2780-1.28 support area. 
- At this point, if price action pulls back above 1.3250, we might have to reconsider the bearish scenario, and consider a possible sideways, or even bullish market ahead. In other words, I think 1.3250 will be a critical resistance for the current bearish scenario.

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