USD/CAD downside remain intact after the Canadian CPI

The USD/CAD pair registered sharp movements in the last hours but the bias remains bearish. At the time of writing, the pair was traded at the 1.2487 level. It seems undecided after the Canadian inflation data publication.

The Canadian Consumer Price Index reported a 0.1% drop matching expectations, while the Core CPI registered a 0.0% growth, the same as in the previous reporting period. In addition, the Wholesale Sales rose by 3.5% beating the 2.8% expected. On the other hand, the US Housing Starts and Building Permits came in better than expected.

As you can see on the h4 chart, USD/CAD registered sharp movements in both directions. It remains to see how it will react after registering only a false breakdown with great separation below 1.2453 former low.

Technically, the outlook remains bearish as long as it stays under the descending pitchfork's median line (ML). Still, a larger downside movement could be activated only by a valid breakdown below 1.2453.

A new lower low, a valid breakdown below 1.2453 could open the door for a larger downside movement. This scenario could bring new selling opportunities. In my opinion, coming back and stabilizing above the median line (ML) could develop an extended sideways movement and it could try to come back higher.