After the FOMC statement, the USD/CAD fell sharply from just above 1.28 down to 1.2450. After this dramatic slide, price has bounced back to tag 1.2750 before stalling again. In the 1H chart we can see the battle between the bulls and the bears, and so far, after the bullish attack during the 3/19 session, bears seem to be holding their line.
1) Price held below the cluster of 200-, 100-, and 50-hour SMAs and has returned below the cluster. This shows maintenance of the near-term bearish bias.
2) The 1H RSI has dipped below 20 and is now holding below 60. This reflects maintenance of the bearish momentum from the 3/18 session.
While the bears seem to be holding in the near-term, this appears to be within the context of a larger time-frame, which is still dominated by the bullish mode.
The daily chart shows USD/CAD holding above the 50-day SMA after tagging it. This shows that bulls are still in control of this market. Also, the fact that the RSI held above 40, even 50, shows that the medium-term bullish momentum is still intact.
Indeed, a break below the 1.2350-1.2450 support area will be needed to open up the bearish outlook in the medium-term. So, if we do believe that the short-term outlook is still bearish within a medium-term bullish outlook, we should look for the market to dip but hold above the 1.2350-1.24 area.
To the upside, a clear break above 1.28 should open up the 1.30-1.3060 highs from 2008-2009.
Otherwise, if price does break below 1.2350, the next key level will be the 1.20 psychological handle. The market would be bullish-neutral in the medium-term, but the long-term trend would remain bullish as price would still be above the 100- and 200-day SMA, and the daily RSI would still likely be above 40.
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