USD/CAD Price Analysis: Loonie bulls defend 200-EMA

• A double top formation around 1.2860 advocates a sheer downside reversal.
• Descending 200-EMA has acted as a major hurdle for the greenback bulls.
• A range shift by the RSI (14) in a 40.00-60.00 territory will weaken the greenback further.

The USD/CAD pair has witnessed a steep fall after attempting to break Monday’s high at around 1.2860 in the Asian session. The asset has sensed significant barricades around Monday’s high and has formed a ‘Double Top’ chart pattern that indicates a sheer bearish reversal ahead. On a broader note, the major is declining for the past two weeks amid broader weakness in the US dollar index (DXY).

A Rising Channel formation on an hourly scale is indicating a prolonged downside trend in the asset. The upper portion of the above-mentioned chart pattern is placed from an average price of July 18 at 1.2990 while the lower portion is plotted from July 22 low at 1.2822.

The 200-period Exponential Moving Average (EMA) at 1.2856 has acted as a major barricade for the counter.

However, the Relative Strength Index (RSI) (14) is oscillating in a 60.00-80.00 range but is likely to shift into a 40.00-60.00 territory as the asset has failed to overstep Monday’s high.

A decisive drop below Tuesday’s low at 1.2837 will drag the asset towards the round-level support at 1.2800, followed by the six-week low at 1.2768.

On the flip side, the greenback bulls could defy the odds and may display gains if the asset oversteps Monday’s high at around 1.2860 confidently. An occurrence of the same will send the major towards July 26 high at 1.2901 and later on to near July 25 high at 1.2947.

USD/CAD hourly chart