USDCAD has formed a reversal pattern on its 1-hour time frame, suggesting that a downtrend might take place. Price has yet to break below the neckline support at the 1.1250 minor psychological level before confirming the potential selloff.
Stochastic is moving out of the oversold zone though, indicating that a bounce might take place before the downtrend happens. The pair could still pull up to the 1.1300 major psychological resistance before heading down. MACD is also suggesting a potential return in short-term buying pressure.
If the bounce is strong enough, another test of the previous highs might happen, creating a triple top formation, which is still a valid reversal pattern. A break past the 1.1400 mark, on the other hand, would indicate that the uptrend could carry on.
By Kate Curtis from Trader’s Way www.tradersway.com