USD/CAD shows oversold signs on the H4 chart but is still premature to talk about a bullish reversal as long is trapped below the downtrend line. The current week could be crucial as the FOMC and the high impact US data could bring a clear direction.
The outlook is bearish as long USDX continues to stay down. Today, the Canadian Housing Starts, Manufacturing Sales, and the US Industrial Production and the Capacity Utilization Rate could bring life on USD/CAD.
USD/CAD Reversal Uncertain!
USD/CAD has printed a potential Falling Wedge pattern signaling an oversold situation. The bearish bias remains intact as long USD/CAD is traded below the black downtrend line. So, only a valid breakout through the downtrend line and beyond 1.2850 could really announce a bullish reversal.
You should be careful as the selling pressure is high. A new lower low, bearish closure under the 1.2707 former low confirms further decline.
- USD/CAD Trading Tips
Sell from below 1.2700 psychological level and use the 1.2550 as a potential downside target. A valid downside breakout should bring a sharp drop.
On the other hand, a false breakdown with great separation below 1.27 or through the downside line, any reversal pattern could announce an upside breakout. We'll have a great buying opportunity after jumping and stabilizing above the 1.2850 level.
Validating the Falling Wedge makes USD/CAD very attractive for the buyers, the median line (ML) of the descending pitchfork could be used as a first upside target.
