CADCHF presents an intriguing opportunity for short sellers as it forms a classical head and shoulders pattern, an elegant harbinger of a potential bearish phase. The pair has recently broken out from a persistent upward channel, further buttressing the case for a downward shift in momentum.
The formation of the head and shoulders pattern is as precise as it gets. The left shoulder and the head have been delineated with surgical precision, while the right shoulder seems to be in the final stages of completion. A firm break below the neckline would confirm the pattern, paving the way for an extended downtrend.
The price has started a retracement after the channel breakout, which coincides perfectly with the golden Fibonacci retracement level of 61.8%. This confluence of the head and shoulders pattern, the channel breakout and the key Fibonacci level creates a compelling technical picture, supporting the idea of a short-term bearish reversal.
Investors need to tread with caution though. Markets are known for their surprises, and it is important to manage risk appropriately. But with prudent risk management, this setup offers a potentially rewarding risk-reward ratio.
Please remember that trading involves risk and this analysis does not constitute financial advice. Always do your own research before making any trading decisions.
The formation of the head and shoulders pattern is as precise as it gets. The left shoulder and the head have been delineated with surgical precision, while the right shoulder seems to be in the final stages of completion. A firm break below the neckline would confirm the pattern, paving the way for an extended downtrend.
The price has started a retracement after the channel breakout, which coincides perfectly with the golden Fibonacci retracement level of 61.8%. This confluence of the head and shoulders pattern, the channel breakout and the key Fibonacci level creates a compelling technical picture, supporting the idea of a short-term bearish reversal.
Investors need to tread with caution though. Markets are known for their surprises, and it is important to manage risk appropriately. But with prudent risk management, this setup offers a potentially rewarding risk-reward ratio.
Please remember that trading involves risk and this analysis does not constitute financial advice. Always do your own research before making any trading decisions.