FX.co ★ USD/CAD

I noticed that right after the news from the US, USD/CAD dropped sharply, and I immediately realized that the dollar weakened across almost all major pairs, which confirmed my earlier thoughts about the calm upward movement being a preparation for a stronger reversal. I have seen this type of market behavior many times before, where the market looks calm and steady for a few days, and then, suddenly, volatility spikes and changes the whole picture. I decided to apply the Fibonacci retracement tool to the current downward correction because I wanted to identify the most important levels where price reactions are likely to occur. I saw that the sellers managed to confidently break through the 23.6% support level, and I expect them to push the price toward the 38.2% retracement zone, which in my view is a critical stage of this correction. I also noticed that the MA200 aligns closely with the 50% retracement, and I see this confluence as a potential cluster of strong support where the market might pause or even rebound. I personally believe that the bears will achieve the 38.2% level before the market rolls back, and I think the correction will not stop there but will likely continue deeper, targeting the 61.8% retracement, which I consider the key level for the overall structure. I view this whole movement not as an isolated case but as a broad reaction in line with the dollar’s weakness across all major pairs, and I expect USD/CAD to mirror this sentiment. I am carefully watching how price behaves at each Fibonacci level, and I think that these retracement zones will guide me in identifying whether the correction is temporary or if a larger bearish structure is forming. I personally find this setup very interesting, because I see not only the technical signals aligning but also the fundamental pressure on the dollar supporting this correction, and I will continue to follow USD/CAD with the expectation that the pair eventually tests the 61.8% level before a stronger reversal emerges.

I observed that after USD/CAD successfully broke through the 1.3877 resistance level, I initially thought the market was preparing for a continuation of the bullish trend, especially since the price managed to climb around 40 pips higher after the breakout. I believed this upward push confirmed the strength of buyers, and I expected further gains. However, I quickly realized that the situation changed dramatically once economic news regarding the USD was released, and I saw how the price dropped sharply, completely reversing the earlier move. I recognized that what happened was a clear false breakout, and I am sure this sudden reversal misled many traders who trusted the bullish continuation. I personally see this as a classic trap in the market, where traders who entered long positions above resistance were caught in the rapid 180-degree turn. I noted that the pair fell more than 100 pips in a very short time, and I interpreted this strong bearish momentum as a signal that sellers regained full control. I believe that going into next week, the main focus should be on identifying selling opportunities rather than anticipating new bullish attempts. I am considering that if the price manages to retrace slightly upward by about 30–40 pips, I would treat that as a potential entry point for a short position. I also identified the 1.3720 support level as my main target, and I think that price has a high probability of reaching it if bearish pressure continues. I am aware that retracements after strong drops are common, and I will carefully monitor how the market reacts around resistance-turned-support levels before executing my plan. I believe this false breakout highlights the importance of waiting for confirmation and not rushing into trades just because of a short-term breakout. I see this setup as an opportunity to align with the new downward momentum, and I expect next week to present favorable conditions for sellers.