USD/CAD Price Analysis: Down 100 pips from session highs, negative RSI divergence on D1

• USD/CAD's Asian session pullback has confirmed bullish exhaustion. 
• A convincing close in the red on Monday would put sellers into the driver's seat.

USD/CAD is currently trading at 1.3338, having hit a high of 1.3438 in early Asia. 

The 100-pip drop has added credence or confirmed buyer exhaustion signaled by Friday's classic doji candle. 

Further, if the Asian session drop is held through the rest of the day, a bearish divergence of the 14-day relative strength index would be confirmed.  The bearish divergence occurs when the index produces lower highs, contradicting higher highs on price and is considered a sign of bearish-to-bullish trend change. 

A bearish divergence, if confirmed, would imply the rally from the Dec. 31 low of 1.2952 has ended and would shift risk in favor of a drop to the ascending trendline rising from Jan. 7 and Feb. 21 lows. Currently, the trendline support is located at 1.3250. 

However, if the daily candle ends with a long upper wick, the bias would turn bullish and the focus would shift to the psychological resistance at 1.35. 

Daily chart

Trend: Teasing bearish reversal

Technical levels