In today’s technical analysis, let’s take a closer look at the American dollar to Canadian dollar, where the chart is drawing a very familiar and extremely important pattern — a head-and-shoulders formation, marked with a red rectangle. This head-and-shoulders appears right at the top of the bullish correction that started back in June. That entire correction phase is shaped like a wedge or a flag — the naming is not crucial here — and it shows that bullish momentum has been gradually fading. Now the price has created a clear topping structure, signaling that buyers are losing control.
What is especially important at this moment is the behavior around the two blue dynamic supports, which are guiding this correction. The first support has already been broken, which was the initial warning sign. The market is now pressing on the second, more important support, and we’re waiting for a decisive breakout. A clean close below this line would confirm the bearish sentiment and serve as the final confirmation of the head-and-shoulders formation. That would be the “last nail in the coffin” for USD/CAD, opening the door for a deeper downswing.
Technically, the sentiment is already tilting strongly to the downside. The pair has started forming lower highs and lower lows, which is the simplest and most reliable definition of a bearish market structure. As long as the price stays below the neckline area and below the broken lower boundary of the correction, sellers remain in control. Only a sharp and decisive return back above the broken support would change the outlook — but judging by the current momentum, that scenario appears unlikely. Overall, USD/CAD is under clear negative pressure.