Decreases towards 1.3500; the next support at the lower limit of the pattern

• The USD/CAD pair could resume its upward move as a falling wedge pattern suggests a bullish reversal signal.
• A break below the psychological level of 1.3500 could cause the pair to test the lower boundary of the falling wedge.
• The immediate barrier appears at the nine-day EMA at 1.3557, aligned with the upper limit of the falling wedge.

USD/CAD is extending its losses for a second straight day, trading around 1.3510 during European hours on Tuesday. Analysis of the daily chart suggests a continuation signal as the bearish wedge pattern forms during an uptrend, suggesting that the bullish price action would resume.

However, the 14-day Relative Strength Index (RSI) remains below the 50 level, indicating that the bearish trend is still in place. A further decline towards the 40 mark would suggest an oversold condition for the USD/CAD pair, signaling the potential for an upward correction in the near future.

On the downside, USD/CAD may navigate the region around the lower boundary of the bearish wedge at 1.3470. A break below this level could strengthen the bearish trend and push the pair to test the six-month low of 1.3441 recorded on August 28.

On the upside, the immediate barrier appears at the nine-day EMA at 1.3557, aligned with the upper boundary of the bearish wedge. A break above the bearish wedge would weaken the bearish trend and lead the pair to the USD/CAD pair to test the “retracement support turns into pullback resistance” level of 1.3590, followed by the psychological level of 1.3600 .

USD/CAD: Daily chart