USD/CAD Price Analysis: Loonie bulls strengthen as ascending triangle breaks downside, 1.2400 eyed

• A downside break of the ascending triangle pattern has weakened the greenback bulls.
• An overbought situation in the RSI (14) is indicating a pullback to the 20-EMA.
• The bearish broader trend will remain intact till the asset auctions below the 200-EMA.

The USD/CAD pair has witnessed a vertical downside after multiple failed attempts of establishment above 1.2647 since April 14. The asset has tumbled below 1.2500 and is eyeing more downside considering the price action.

An explosion of the ascending triangle chart formation on the downside weakened the greenback bulls. The horizontal resistance of the above-mentioned chart pattern is placed from April 14 high at 1.2642 while the ascending trendline is plotted from April 14 low at 1.2521. The asset has displayed a textbook kind of selling after breaking below the ascending triangle.

A bear cross of 20- and 200-period Exponential Moving Averages (EMAs) at 1.2596 triggered an intense sell-off in the asset.

The Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which may result in a minor pullback as an oversold situation will kick in.

Investors should focus on a pullback towards the 20-EMA at 1.2520, which will be an optimum selling opportunity. After tapping the 20-EMA, the emergence of potential sellers will drag the asset towards March’s low at 1.2430, followed by the round level support at 1.2400.

On the contrary, greenback bulls may regain control if the asset surpasses Friday’s low at 1.2590, which will drive the pair towards April 14 and April’s high at 1.2642 and 1.2676 respectively.

USD/CAD hourly chart