The US Dollar to Canadian Dollar exchange rate USD/CAD has fallen to just above the key psychological 1.3000 level.

This could be an important no-looking back, crossroads moment for the pair from a technical perspective.

The daily chart is shouting “Buy” about as loud as you can get.

The pair has reached a multi-level support platform made up of the range lows, the 200-day moving average and the S1 monthly pivot, all in the 1.300/1s.

This support zone is represented by the green hatching on the chart below.

It forms a tough obstacle against more downside and suggests the pair will use the support zone as a launch pad higher.

Pour on the Bollinger

The hammer formed at a price extreme, as illustrated by the fact that over 50% of its range poked below the lower Bollinger band, which is a level two standard deviations from the 20-day moving average.

When price pokes outside of a Bollinger band it shows the exchange rate is stretched and likely to rebound back inside the bands and, in this case higher.

This adds further bullish evidence from the daily chart.

Taken together this is strong evidence of a push higher evolving, with a break above the hammer’s open at 1.3177 confirming a probable reversal and move up to 1.3300.

Panning out to a 'Cliff Edge'

Pan out to the monthly chart and the situation looks much more bearish.

In fact it looks somewhat more like the final scene in the film the Italian Job when the van is precariously balanced on the cliff edge and Michael Cane’s character says, “Hang on a minute lads, I’ve got a great idea.”

The exchange rate looks similarly precariously poised to break lower and move back down towards the lower 1.20s, if not into the 1-teens.

For a start, there is a text-book, bearish, three black crow’s Japanese candlestick pattern which formed just after the 2015 peak, which bodes very ill for the pair.

The simple fact is that the move down since the peak looks incomplete.

Normally corrections against the dominant trend in financial markets are composed of three broad waves.

The move on USD/CAD’s monthly chart, however, looks incomplete as it has only formed two waves, with the final move down still to unfold.

The charts below show two examples of these corrections in order to illustrate the point – they are known as ABC corrections.

the first one in an idealized version; the second from a real stock on the NASDAQ.

There is a high chance a similar C wave will eventually pull USD/CAD down to between 1.20 -1.13.

Because it is the monthly chart, however, it is difficult to know when this might happen, and it could take quite a long time.

Nevertheless, the wave B looks mature so it could happen soon.

A break below 1.3000 could be a game changer sending the pair dramatically lower.