Canadian Dollar Forecast: USD/CAD Falling Wedge Threatens Reversal
- As looked at in yesterday’s webinar, USD/CAD has built into a falling wedge formation.
- Falling wedges will often be approached with the aim of bullish reversals, and USD/CAD has already jumped up to the first resistance level looked at yesterday.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, or the falling wedge shown in USD/CAD, check out our DailyFX Education section.
It’s been a day of strength for USD/CAD which may come as a surprise given that he currency pair pushed down to a fresh two-year-low earlier this morning. But, as USD-strength has begun to filter in, USD/CAD has rallied up to find a bit of resistance from a prior batch of swing lows.
This resistance was highlighted in yesterday’s webinar, and plots around the 1.2719 area on the chart. This was a batch of support in early-mid December and, so far this morning, sellers have been able to defend this line in the sand following the pair’s bullish burst.
USD/CAD TWO-HOUR PRICE CHART
Chart prepared by James Stanley; USDCAD on Tradingview
USD/CAD BUILDS FALLING WEDGE – CAN BUYERS BRING REVERSAL?
Also highlighted in yesterday’s webinar is the slightly bigger picture context in the pair; in which the build of a falling wedge formation threatens the possibility of a pullback. As both USD and USD/CAD have been showing varying oversold conditions, the appearance of this formation highlights the fact that sellers may be preparing to take a back seat, at least temporarily.
Falling wedges are often approached with the aim of bullish reversals; and the levels looked at yesterday were 1.2719 (already in play), 1.2791 (the Monday swing high) followed by 1.2922 (the November swing-low).
To learn more about falling wedge patterns and how traders can incorporate them into their strategies, join us in DailyFX Education
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