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Some More but Limited Downside Risk for USD/CAD

This week, USD/CAD rallied to a new high on the year at 1.3353. After this latest push, the market started to retreat. After a bearish swing, the next upward swing was rejected at 1.33, suggesting further bearish correction outlook in the short-term.

USD/CAD 4H Chart 8/28
(click to enlarge)

The short-term outlook however might need to be limited. As we can see in the 4H chart if price falls to the area between 1.31 and 1.3150, USD/CAD will be testing a rising trendline, the middle of the moving average cluster, and a support/resistance pivot area. 

In fact if price suggests support there and shows some bullish movement, I would look for a bullish continuation scenario. A break below 1.31 however neutralizes the prevailing uptrend and puts USD/CAD in a sideways maybe even slightly bearish outlook for the short-term.