• The smart money has been channelizing after a pullback move from 1.3600.
• USD/CAD is hovering around the 50-EMA, therefore, the explosion will be crucial.
• A bearish range shift by the RSI (14) will trigger a downside momentum.

The USD/CAD pair is declining firmly in the early Tokyo session after failing to cross the 1.3750 hurdles on Thursday. Broadly, the asset has turned sideways after a pullback move from 1.3600. The major is oscillating in a 1.3656-1.3756 range.

On an hourly scale, the asset witnessed a steep fall after sensing exhaustion in the uptrend. The major was on a spree of making higher highs while the momentum oscillator, Relative Strength Index (RSI) (14) made a lower high, which indicates a loss in the upside momentum. And, the downside bias got strengthened after dropping below Tuesday’s low at 1.3640.

It is worth noting that the pullback move after hitting a low of 1.3600 seems to conclude where investors have poured smart money by supporting the loonie bulls. The asset has formed a consolidation range around the 50-period Exponential Moving Average (EMA) at 1.3684 and a breakdown of the same will result in sheer weakness in the counter.

Also, the 200-EMA at 1.3564 is looking turn flat, which indicates a loss of momentum in the longer-term trend.

The RSI (14) has shifted into the 40.00-60.00 range and a breakdown into the bearish trajectory of 20.00-40.00 will trigger a downside momentum.

A decisive break below the round-level support placed at 1.3600, which is Wednesday’s low will drag the asset towards the psychological support at 1.3500, followed by September 19 high at 1.3344.

On the flip side, a break above Thursday’s high at 1.3755 will drive the asset towards Wednesday’s high at 1.3833. A breach of the latter will result in a fresh two-year high at 1.4000.

USD/CAD hourly chart