USD/CAD technical analysis: Bear trap below 200-day MA?

• USD/CAD has again found bids below the 200-day MA.
• The pair had trapped sellers on the wrong side of the market with a dip below the 200-day MA in the first and the last week of February.

The sell-off in the USD/CAD seems to have run out of steam below the widely followed 200-day moving average (MA).

On Monday, the currency pair found bids below the 200-day MA at 1.3268. This is the third time in four months that the sellers are flashing signs of exhaustion below the long-term average.

The pair had dropped below the 200-day MA on Feb. 1. Back then the average was located at 1.3118. The dip below the average, however, was short-lived with the pair rising to 1.3340 by mid-February.

On similar lines, the dip below the 200-day MA seen in the last week of February was followed by a solid bounce to levels above 1.3450 by March 7.

It remains to be seen if the latest dip below the 200-day MA will trap sellers on the wrong side of the market.

It is worth noting that the 14-day relative strength index (RSI) is currently sitting on a strong support at 33.91. A break lower would imply continuation of the sell-off.

Daily chart

Trend: Bearish

Pivot points