EURCAD had been carving out higher lows since late July, with a rising trend line connecting these swing points into what looked like an ascending triangle formation.

That support gave way in early September, as price sliced through the trend line and tumbled down to the 1.6000 major psychological area, confirming a shift in near-term momentum.

Price has since bounced off this low and is now working its way back up toward the broken trend line, which could align with a retest of the nearby Fibonacci retracement levels.

The 38.2% Fib is at 1.6077, close to where price is currently trading, while the 50% level sits at 1.6098. A larger bounce could stretch to the 61.8% Fib at 1.6119 or the 100% level at 1.6188, which also lines up with the descending trend line drawn from the recent swing high.

If any of these levels hold as a ceiling, EURCAD could resume its slide toward the 1.6008 low or lower. A break above the Fibs and descending trend line, on the other hand, could open the door to a larger recovery.

The 100 SMA remains below the 200 SMA, keeping the path of least resistance tilted to the downside for now, even with the recent bounce. Price would need to reclaim both moving averages to shift the broader bias back in favor of buyers.

Stochastic reached the oversold area and is already curling higher, reflecting a return in buying pressure after the selloff. RSI is also turning up from depressed levels, though it still has room to climb before reaching overbought territory, suggesting the bounce could have some legs left.

Traders may want to watch how price behaves around the Fib cluster near 1.6100, as a rejection there could be the cue sellers are looking for to push EURCAD back toward its recent lows. The pair could take cues from the ECB decision, as a “dovish hike” that downplays future tightening odds could bring downside for the shared currency.