• An H&S formation has brought a firmer reversal in the asset.
• Loonie bulls are strengthened as the 20- and 50-EMAs turned lower.
• Momentum oscillator RSI (14) has shifted into a bearish range of 20.00-40.00

The USD/CAD pair is witnessing a steep fall since Monday after forming a weekly high at 1.2777. The greenback bulls have extended their losses in the Asian session after breaking the consolidation formed in a narrow range of 1.2720-1.2746.

A textbook similar Head and Shoulder chart formation on the hourly scale has resulted in a weakness in the counter. Usually, a Head and Shoulder formation denotes inventory distribution from institutional investors to retail participants after forming a potential top on the chart.

The 20- and 50-period Exponential Moving Averages (EMAs) at 1.2722 and 1.2701 respectively have turned lower, which signals no more upside in the counter.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00 swiftly from the bullish range that signals the strength of the loonie bulls.

Should the asset drops below Tuesday’s low at 1.2685, loonie bulls will drag the asset towards April 19 high at 1.2647, followed by the round level support at 1.2600.

On the flip side, greenback bulls can regain control if the asset oversteps Monday’s average traded price at 1.2752. This will drive the asset towards the Monday’s high and February 25 high at 1.2777 and 1.2820 respectively.

USD/CAD hourly chart