In my last analysis on August 5th I warned that USDCAD was heading towards 1.29 as there were many signs of another false breakout and bearish reversal. At the time this pair was trading around 1.30. Now it is still below 1.29 after bouncing strongly from below 1.28. Trend is clearly bearish. Price is making lower lows and lower highs and with crude in a bullish short-term trend there seems to be more downside for this pair.
The black rectangle represents the big resistance area of 1.2950-1.30 that bulls should overcome in order to have a chance of a trend reversal to the upside. On the other hand any bounce towards that area is a selling opportunity. The bigger picture remains bearish as price has broken below a long-term triangle and got rejected at the weekly cloud resistance.
If the entire consolidation is over with a downward break, we should expect the USDCAD pair to reach at least 1.20 over the coming weeks. Another good indicator for strengthening this scenario will be an oil price break above 52$. I was expecting USDCAD to break higher and above the triangle and move towards 1.36 but we have to adjust to what the market signals to us and change our views. If we do not…we lose…that is why I followed the signals by the market and shorted it when everyone was buying on August 5th.
Thank you for taking your time to read my new post.