USD/CAD Threatening Bullish Continuation from a Falling Wedge Pattern

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USD/CAD Threatening Bullish Continuation from a Falling Wedge Pattern

The USD/CAD is trading at the crossroad. The 1H chart shows a price top off at 1.0960 last week. This week, USD/CAD has been sliding further but in the process formed a falling wedge pattern.

USD/CAD 1H Chart
usdcad 6/10 1h chart

After finding support at 1.0890, a previous support pivot, USD/CAD rallied to 1.0920 and is challenging the falling wedge resistance. A falling wedge is often seen as a consolidation pattern before the prevailing trend continues. In the 1H chart, the prevailing trend was bullish and traders are threatening a bullish continuation.

Outlooks:
1) Ability to hold above 1.0890-1.09 maintains a bullish bias in the 1H chart. A break below 1.0890 however could be a sign of further bearish correction, outside of the current falling wedge pattern.

2) A break above 1.0930 would clear above the falling wedge, and price would be above all the moving averages (200,100, 50) in the 1H time-frame. This would be a bullish continuation signal, with the 1.0960, then the 1.10 levels in sight.

When you look at the daily chart, you see that the market is sideways, and maybe slightly bearish, but it also appears price may have found a bottom around 1.09.

USD/CAD Daily Chart
usdcad 6/10/2014 daily chart

A break above 1.10 and a break above the 100-day SMA can revive the prevailing bullish outlook, and open up the 1.1224 and 1.1278 highs. The 1.0532 level is in the way as well. But if price can subsequently hold above 1.09, the outlook should remain bullish.

Failure to push above 1.10 retains downside risk toward the 1.0814 low, and then the 200-day SMA around 1.0775.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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