USD/CAD Price Analysis: Drops 0.15%, death cross on the daily chart

USD/CAD is trading near 1.3330 at press time, representing a 0.15% decline on the day. The bulls failed to clear the psychological hurdle of 1.34 on Monday. 

The daily chart shows the 50-day simple moving average (SMS) has crossed under the 200-day SMA, confirming the so-called death cross, a long-term bearish indicator. 

The death cross, however, is based on backward-looking averages and tends to lag prices. As such, it is often considered a contrarian indicator. 

In addition, the slow stochastic has created higher lows contradicting lower lows on the price chart. That bullish divergence is suggestive of the ebbing of downward momentum. A similar sentiment is being echoed by the long tail attached to the previous week’s candle. 

All in all, the odds appear stacked in favor of a stronger corrective bounce, possibly to the 50-day SMA, currently at 1.3496. The case for a notable bounce would weaken if the spot finds acceptance under the Aug. 5 low of 1.3233. 

Daily chart

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