USD/CAD falling wedge breakout
Updated
Here I present my analysis on the USD/CAD pair (aka Loonie), which as most of us might have seen as well, has recently broke out of the falling wedge pattern. The following confluences are identified that indicate a bullish bias for the currency pair;
1. Rising wedge pattern breakout
2. Awesome oscillator divergence from price
3. Price retracing from the 78.6 Fibonacci retracement level of the prior bullish impulse on the daily chart.
3. strong USD fundamentals and a poor GDP release of the Canadian economy
However, it must be kept in mind that the price is struggling to break above 1.31844 which acts as the distal line of the supply zone indicated on the chart. Once price breaks this supply zone, we can ride a bullish swing of approximately 80 pips, maintaining a risk to reward of 1:1.61.
Also, there's also a small chance for the price to go down to a 1.30500 where exists a strong demand zone, again bouncing back long from the demand zone.So, it is essential for us to wait for the price to break the 1.31844 supply zone to open a long position on this pair.
Also, similar pattern can be seen on the USD/CHF chart. This is because of its strong correlation with the USD/CAD on the 4h chart of approximately . Therefore, it would be wise to not open positions on both the pairs and stick to only one of them to manage your risk wisely.
Happy Trading!
1. Rising wedge pattern breakout
2. Awesome oscillator divergence from price
3. Price retracing from the 78.6 Fibonacci retracement level of the prior bullish impulse on the daily chart.
3. strong USD fundamentals and a poor GDP release of the Canadian economy
However, it must be kept in mind that the price is struggling to break above 1.31844 which acts as the distal line of the supply zone indicated on the chart. Once price breaks this supply zone, we can ride a bullish swing of approximately 80 pips, maintaining a risk to reward of 1:1.61.
Also, there's also a small chance for the price to go down to a 1.30500 where exists a strong demand zone, again bouncing back long from the demand zone.So, it is essential for us to wait for the price to break the 1.31844 supply zone to open a long position on this pair.
Also, similar pattern can be seen on the USD/CHF chart. This is because of its strong correlation with the USD/CAD on the 4h chart of approximately . Therefore, it would be wise to not open positions on both the pairs and stick to only one of them to manage your risk wisely.
Happy Trading!
Note
the correlation coefficient was found to be 0.65 between USD/CAD and USD/CHFTrade closed: stop reached
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