USD/CAD Price Analysis: Bearish below monthly support with prospects for bullish correction

• Price is bound by support and resistance n the daily chart, but bearish below the monthly support.
• All eays on critical support and resistance levels on the daily chart.

Despite the downside in USD/CAD, CAD net long positions drifted lower but have held in positive territory for the past three weeks having bounced sharply in late December. 

With that being said, the longer-term time frames are showing corrective price action behaviour in what could be a phase of accumulation in the makings before the next bearish drive. 

The following is a top-down analysis that shows the key daily boundaries which are containing the market for the meanwhile. 

Monthly chart

It is still early days, but the monthly chart shows that should the price remain contained over the coming weeks between a narrow range, then a bullish doji would firm the bullish bias for an upside correction to resistance. 

Weekly chart

The weekly chart has printed a doji albeit with a lower close. The price is testing the resistance and a weekly close below it would be bearish. A close above would be bullish. 

Daily chart

The above chart illustrates two scenarios.

A bullish close above supporting areas in the vicinities of the 50% and 61.8% Fibonacci retracement levels and a subsequent new bullish impulse would equate to a bullish reverse head and shoulders pattern. 

Prospects thereafter would be bullish on a break of the overhead resistance and onwards towards the monthly resistance overhead. 

A secondary scenario is with the price breaking the supporting areas and continuing to the downside.