The USDCAD has rallied as visible in this 4-hour chart (H4). This currency pair has formed a bump-and-run formation which is a bearish chart pattern as marked by the light red triangle in the above chart.
We expect the USDCAD to correct back down to its support zone which is marked in light blue in the above chart.
MACD confirmed the rally as momentum increased, but a gap has formed between the histogram and its moving average which is a bearish sign. RSI is trading in extreme overbought territory and a breakdown should further fuel the correction.
We recommend a short position at 1.0825-1.0845 with a potential second entry level at 1.1000. Take Profit Zone: 1.0650 – 1.0700
We also recommend a stop buy order at 1.0875 with a take profit target of 1.1000 in order to hedge our short position and before adding new short positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.0875.
Click to enlarge picture.
We expect the USDCAD to correct back down to its support zone which is marked in light blue in the above chart.
MACD confirmed the rally as momentum increased, but a gap has formed between the histogram and its moving average which is a bearish sign. RSI is trading in extreme overbought territory and a breakdown should further fuel the correction.
We recommend a short position at 1.0825-1.0845 with a potential second entry level at 1.1000. Take Profit Zone: 1.0650 – 1.0700
We also recommend a stop buy order at 1.0875 with a take profit target of 1.1000 in order to hedge our short position and before adding new short positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.0875.
