USD/CAD Potential Retracement and Downside OutlookAnalysis Summary
Break of Structure (BOS) and Change of Character (CHoCH): Multiple BOS and CHoCH markings indicate shifts in market momentum. The most recent BOS suggests a bearish trend continuation, while the CHoCH levels mark zones where short-term bullish momentum shifted back to bearish.
Strong High: The chart shows a strong high around 1.3950, indicating a recent resistance level where sellers have taken control. This level is significant and could act as a barrier if the price attempts a retracement.
Supply Zone: The red-shaded area around 1.3915–1.3925 highlights a supply zone, which is likely to attract selling pressure if the price retraces to this area. This zone could serve as an ideal entry point for short trades targeting lower levels.
Weak Low: The weak low near 1.3880 marks a level of vulnerability in the bearish structure. If this low is tested and broken, it could confirm further downside movement.
Potential Scenarios:
Bearish Continuation: If the price retraces to the supply zone around 1.3915–1.3925 and faces resistance, a bearish move targeting the weak low at 1.3880 is likely. A break below this level could extend the downtrend toward lower support levels.
Short-Term Retracement: A minor bullish retracement into the supply zone may provide an opportunity for sellers. However, if the price breaks above this zone and challenges the strong high at 1.3950, the bearish outlook could be invalidated in favor of a potential trend reversal.
Conclusion
USD/CAD is currently exhibiting bearish signs, with a possible retracement toward the supply zone around 1.3915–1.3925. Sellers may find opportunities in this area, aiming for a continuation to the weak low at 1.3880. Traders should watch for reactions in the supply zone to gauge the strength of the bearish trend.
