Last week, USDCAD saw a powerful decline which accelerated the gradual fall from March’s high. The lows were not maintained and that rally, supported by the 100-day average, extended in a modest way in the early part of this week, Collins says.

That consolidation – or reaction - ended with Thursday's renewal of significant selling interest. Prices broke the average and moved to the base of a Keltner channel that is still trending negatively. The way is open for a sizeable move lower in the coming days, he adds.

Target for the trade is 1.2088, this month’s low, but a move through that point then exposes sentiment to 1.1988, a 38% pullback of the rise from last July’s low.

The risk level is assessed as 1.2237, according to Collins.