The USD/CAD plunges aggressively, signalling a potential reversal on the short term, the Loonie is dragging the pair down as the USD was weakened by the USDX’s drop. However, we still need a confirmation that the price will start a larger drop because we have several false breakouts in the previous two weeks.

Price has managed to drop below the 1.3341 Friday’s low, is very heavy and looks unstoppable on the short term, but as I’ve said, the current breakdown still needs confirmation, personally I’m waiting for a fresh trading signal because right now will be better to stay away because we don’t have any trading opportunity.

The USD has plunged as the dollar index has slipped lower today, the index has dropped and has erased the morning gains, right now is trading in the red because has touched a strong resistance area. The Loonie has received a helping hand also from the Canadian Housing starts indicator, which has increased from 214K to 254K in March, beating the 212K  estimate, on the other hand the USD has dropped in the absence of important data, the Labor Market Conditions Index was reported at 0.4 points, much below the 1.5 points in the previous reporting period.

The price has plunged and has managed to break below the median line (ml) of the minor ascending pitchfork, now is very close the 38.2% retracement level, remains to see if this will be a valid breakdown, you can see that we had several false breakouts n the previous weeks.

A valid breakout below the median line (ml) and a drop below the 38.2% retracement level will open the door for more declines, if this scenario will happen, then the next downside target will be at the lower median line (lml)  of the minor ascending pitchfork. Is expected to drop after the false breakout above the upper median line (UML) of the major descending pitchfork. The failure to reach the outside sliding line (descending dotted line) has attracted the sellers again, which have taken full control and now could drive the rate towards fresh new lows.