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USD/CAD Price Analysis: A Decline Below 1.3650 Will Signal The Formation Of a Double Top
USD/CAD has been able to maintain 1.3560 despite a recovery in the USD Index. The quarterly growth rate of Canada's gross domestic product was 0.8%, versus 0.4% as estimated and a stagnant performance reported earlier. USD/CAD has formed a Double Top pattern, which will be activated upon a decisive break below 1.3568.
During the Tokyo session, the USD/CAD managed to defend its downside near 1.3560. The Canadian dollar has gained some ground as the US Dollar Index (DXY) recovers. After falling to around 104.13 on expectations that the Federal Reserve (Fed) will increase interest rates in June, the USD Index has exhibited a robust recovery.
The Canadian Dollar strengthened on Thursday following the release of positive Gross Domestic Product (GDP) figures for the first quarter. The quarterly gross domestic product (GDP) grew by 0.8% as opposed to the 0.4% expansion that was predicted, and a stagnant performance was reported in the previous quarter.
While the monthly gross domestic product (GDP) for March remained unchanged, it managed to avoid contraction, contrary to market participants' expectations. The content is insufficient to compel the Bank of Canada (BoC) to increase interest rates once more.
On an hourly scale, USD/CAD pair has formed a Double Top chart pattern, indicating a bearish reversal due to a lack of purchasing interest near critical resistance marked by the May 26 high of 1.3665. A confident breach of the support level near 1.3568 will activate the Double Top pattern. Potential support is located at 1.3485 from the low on May 22.
At 1.3592, a 20-period Exponential Moving Average (EMA) with a downward slope indicates a bearish near-term trend.
In the meantime, the Relative Strength Index (RSI) (14) is fluctuating within a bearish range of 20.00-40.00, indicating that further deterioration is imminent.
A break below the intraday low at 1.3563 will push the asset toward the May 17 high at 1.3536 if it occurs in the future. A breakdown below the latter will expose the Canadian dollar to its low on May 22 of 1.3485.
In contrast, a new purchase above the 26-day high of 1.3655 would propel the asset toward the round-level resistance at 1.3700, followed by the 27-day high of 1.3745.
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