USDCAD – Rising Wedge Breakdown Signaling Bearish Reversal
Pair: USD/CAD
Timeframe: 30-Minute
Date: May 6, 2025
Type: Pattern-Based Reversal Setup
Bias: Bearish
🧠 Technical Pattern: Rising Wedge (Bearish Reversal)
The chart presents a clearly defined Rising Wedge pattern, a bearish formation that often appears after an uptrend or during consolidation. It's marked by:
Two upward-sloping trendlines that converge over time.
Support Line (lower trendline): Connecting higher lows.
Resistance Line (upper trendline): Connecting higher highs.
This wedge shows weakening bullish momentum, with each new high being met with less enthusiasm, indicating exhaustion and a likely trend reversal.
🔎 Structure & Key Zones
Resistance Zone: Around 1.3820 – 1.3840, tested multiple times but failed to break convincingly.
Support Zone (Pre-Breakdown): Around 1.3760 – 1.3770, where price was repeatedly supported before the breakdown.
Wedge Breakout: The price decisively broke below the wedge support, signaling bearish control.
This breakdown aligns with classic technical theory, where a bearish wedge breakdown often leads to a sharp downward move.
📌 Trade Setup Details
✅ Entry Plan
Breakout Entry: Upon confirmation of the break below the wedge structure.
Retest Opportunity: Price may retrace back to the former support (now resistance) zone around 1.3785 – 1.3790, offering a secondary entry.
🎯 Targets
TP1: 1.37651 – A key intraday level near a minor structure low.
TP2: 1.37434 – The projected target based on the wedge height and a strong horizontal support area.
🛑 Stop Loss
Placed above the wedge’s upper boundary and prior swing high at 1.38403, which invalidates the bearish breakout if breached.
📐 Target Projection Logic (Measured Move)
The wedge's maximum height is projected downward from the breakout point to estimate a reliable target zone.
In this case, the projected move reaches 1.37434, aligning with prior price action support and enhancing the probability of the setup.
⚠️ Risk Management Considerations
This setup offers a favorable risk-to-reward ratio, especially on a retest entry.
Traders should confirm the move using volume analysis or a candlestick rejection at the retest level.
Proper position sizing and discipline on SL placement are key to managing potential whipsaws.
🧾 Summary of Trade Idea
Component Details
Pattern Rising Wedge (Bearish)
Bias Bearish
Entry Zone 1.3785–1.3790 (on retest)
Stop Loss 1.38403
TP1 1.37651
TP2 1.37434
This is a textbook example of a wedge breakdown trade, combining clean structure with actionable levels. Ideal for short-term traders or intraday swing traders seeking precision-based setups.
Pair: USD/CAD
Timeframe: 30-Minute
Date: May 6, 2025
Type: Pattern-Based Reversal Setup
Bias: Bearish
🧠 Technical Pattern: Rising Wedge (Bearish Reversal)
The chart presents a clearly defined Rising Wedge pattern, a bearish formation that often appears after an uptrend or during consolidation. It's marked by:
Two upward-sloping trendlines that converge over time.
Support Line (lower trendline): Connecting higher lows.
Resistance Line (upper trendline): Connecting higher highs.
This wedge shows weakening bullish momentum, with each new high being met with less enthusiasm, indicating exhaustion and a likely trend reversal.
🔎 Structure & Key Zones
Resistance Zone: Around 1.3820 – 1.3840, tested multiple times but failed to break convincingly.
Support Zone (Pre-Breakdown): Around 1.3760 – 1.3770, where price was repeatedly supported before the breakdown.
Wedge Breakout: The price decisively broke below the wedge support, signaling bearish control.
This breakdown aligns with classic technical theory, where a bearish wedge breakdown often leads to a sharp downward move.
📌 Trade Setup Details
✅ Entry Plan
Breakout Entry: Upon confirmation of the break below the wedge structure.
Retest Opportunity: Price may retrace back to the former support (now resistance) zone around 1.3785 – 1.3790, offering a secondary entry.
🎯 Targets
TP1: 1.37651 – A key intraday level near a minor structure low.
TP2: 1.37434 – The projected target based on the wedge height and a strong horizontal support area.
🛑 Stop Loss
Placed above the wedge’s upper boundary and prior swing high at 1.38403, which invalidates the bearish breakout if breached.
📐 Target Projection Logic (Measured Move)
The wedge's maximum height is projected downward from the breakout point to estimate a reliable target zone.
In this case, the projected move reaches 1.37434, aligning with prior price action support and enhancing the probability of the setup.
⚠️ Risk Management Considerations
This setup offers a favorable risk-to-reward ratio, especially on a retest entry.
Traders should confirm the move using volume analysis or a candlestick rejection at the retest level.
Proper position sizing and discipline on SL placement are key to managing potential whipsaws.
🧾 Summary of Trade Idea
Component Details
Pattern Rising Wedge (Bearish)
Bias Bearish
Entry Zone 1.3785–1.3790 (on retest)
Stop Loss 1.38403
TP1 1.37651
TP2 1.37434
This is a textbook example of a wedge breakdown trade, combining clean structure with actionable levels. Ideal for short-term traders or intraday swing traders seeking precision-based setups.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.