Overview:
Two months ago, the bearish swing (initiated in March 2014) was hindered at the price level of 1.0620. This price level corresponded to the lower limit of the channel as well as the backside of a steeper bearish one.
A bullish breakout off the movement channel took place in August. Since then, the pair has been trending-up within the depicted bullish channel.
As mentioned before, breaching the price zone of 1.1230-1.1260 and fixation above it triggered new bullish impulse. Strong bullish momentum has been expressed for a couple of weeks so far.
Few days ago, the USD/CAD pair tested the upper limit of a steeper bullish channel depicted on the chart. This corresponded to the price level of 1.1370.
Bearish rejection was anticipated and expressed after such a long bullish swing resulting in a bearish correction towards 1.1260.
Recommendations:
The bulls were pushing beyond the upper limit of the movement channel. The USD/CAD pair looked overbought on the daily chart.
Conservative traders were looking for short positions around the price zone of 1.1370-1.1390 which was recommended as a valid SELL entry with SL located just above 1.1400. This position is running in profits now.
On the other hand, for traders who missed the initial signal, 4H fixation below 1.1230 - 1.1210 ( 50% Fibonacci level ) is another valid signal. It indicates another SELL entry with a higher risk.
Initial targets are located at 1.1180-1.1160.
