USD/CAD Price Analysis: Rebounds swiftly from multi-year lows, back around 1.2700 mark

• USD/CAD staged a goodish intraday bounce after hitting fresh multi-year lows.
• The formation of a falling wedge could be seen as signs of bearish exhaustion.
• A sustained move beyond 1.2760 area is needed to confirm the bullish setup.

The USD/CAD pair quickly recovered over 50 pips from multi-year lows and refreshed daily tops during the mid-European session. The pair was last seen trading just below the 1.2700 mark, up around 0.15% for the day.

The intraday slide managed to find some support near a one-month-old descending trend-line. This, along with another downward sloping line, constitutes the formation of a falling wedge on short-term charts. This could be seen as the first signs of bearish exhaustion.

That said, technical indicators on 4-hourly/daily charts are holding deep in the bearish territory and still far from being in the oversold zone. This makes it prudent to wait for a sustained breakthrough the wedge resistance before confirming that the USD/CAD pair has bottomed out.

In the meantime, any subsequent positive move beyond the 1.2700 mark might trigger a near-term short-covering bounce. The USD/CAD pair might then rally to challenge a key pivotal resistance near the 1.2760 region, marking the top boundary of the falling wedge.

On the flip side, the daily swing lows, around the 1.2630 region, now becomes immediate strong support. A convincing break below will negate the bullish reversal pattern and turn the USD/CAD pair vulnerable to prolong the recent bearish trajectory.

USD/CAD 4-hourly chart

Technical levels to watch