USDCAD is edging lower today, hovering below the 1.3605 level. The upleg that started on May 8 almost reached the double bottom pattern’s neckline sitting at 1.3667. The pattern remains valid, but the neckline has to be broken for the USD bulls to take advantage of this bullish structure. Until this occurs, they have to fend off the bearish pressure from the USD bears. 

In the meantime, the Average Directional Movement Index (ADX) is stuck below its 25-threshold signaling a range-trading market. The stochastic oscillator is once again more interesting as it is currently trying to break below both its moving average and overbought territory. A successful move lower could be seen as a bearish signal. However, even if the stochastic moves sideways, the acute convergence of the simple moving averages (SMAs) is a typical indication of an imminent move.

Should the USD bears decide to push the pair even lower, they would come up against the key 1.3509-1.3533 area defined by the 50-, 100- and 200-day SMAs and the October 4, 2022 low. Lower, the 38.2% Fibonacci retracement of the April 5, 2022 – October 13, 2022 uptrend at 1.3375 awaits them, a tad above the double bottom pattern lows at the 1.3300-1.3314 area.

On the other hand, if the USD bulls decide to ignore the mixed momentum indicators, they would try to regain the 23.6% Fibonacci retracement at 1.3605. Even higher, the double bottom neckline at 1.3667 and the December 16, 2022 high at 1.3704 respectively could prove tougher to crack.

To sum up, the USDCAD downleg could continue if the stochastic turns aggressively lower. The USD bears are keen for another retest of the 1.3509 area, but the bulls are itching for the completion of the double bottom pattern.