USDCAD has formed a double top chart pattern on its 1-hour time frame, indicating a forex trading signal that the uptrend is about to turn. Price has yet to break below the formation’s neckline near the 1.0900 major psychological support before confirming the selloff.
Stochastic is almost in the overbought zone already, which means that bears could jump in sooner or later. A forex signal break below the 1.0900 mark could lead to a drop of nearly a hundred pips, which is the same height as the chart pattern. Stronger selling pressure could take the pair down to the 1.0700 levels.
Shorting below 1.0900 with a tight stop and a target at 1.0800 could yield a good return on risk for a short-term trade.
Forex Trading Signal Forecast
Earlier this week, Canada printed a stronger than expected housing starts report, which showed a 200K gain versus the estimated 194K figure. Prior to that though, jobs data from Canada came in weaker than expected as the economy failed to rebound from the job losses reported in the previous month.
Rising oil prices could keep the Loonie supported in the coming days though, as tensions in Russia and their imposed sanctions could drive commodity prices higher. For today, there are no major reports due from the US and Canada.
US retail sales could pose an event risk to this setup later on though, as stronger than expected hiring gains in the past months could lead to a pickup in consumer spending. If the headline and core figures show strong results, USD/CAD might bounce back up and make another top around the 1.0990 area.
An upside forex trading signal break from the 1.1000 major psychological level could be a sign that more gains are in the cards for this pair, as the resistance level hasn’t been broken in quite some time. Risk aversion could keep Loonie rallies at bay and drive safe-haven flows to the dollar.
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