picatris
Short

Is the loonie on the brink of a breakout?

FX:USDCAD   U.S. Dollar / Canadian Dollar
USDCAD has been a quite difficult trade. Oil is climbing and that strengthens it (makes USDCAD go lower) on the other hand the green back is getting stronger each day, which would push it higher. This Monday's strong move with a gap pushed this pair to the bottom of a quite strong channel. Also the previous up swing fell short of a perfect AB=CD , which gave a lot of hope for the bears. The resulting fib ratios have been holding quite well serving as clear resistance and support levels. MACD is also helping showing perfectly the down acceleraion of momentum, playing perfectly with price (no divergence). More interestingly in the last weeks, a clear head and shoulders has formed (marked with yellow ovals)

Nevertheless, due to the still ranging nature of this pair, I would not be surprised if it will start going upwards, because of the channel bottom support. But if it does, it must be a short lived swing, as the price will resume its downward path through the channel. On the other hand, if that channel breaks it can be a quite steep move down. Therefore we must be very cautious. It would be really unfortunate to miss a possible great trade as this. My analysis will be proven wrong if and only if the channel breaks upward, so that will be my stop. The take profit level will be near the level of the initial retracement.
Nice idea on USDCAD and there may be bearish potential as you have identified. Using the Tidal Shift Strategy, which is a trend trading strategy that aims to catch shifts in trend using trader sentiment indicator. The strategy looks to short when the Speculative Sentiment Index reaches its highest value for the past 145 trading hours. Currently our Speculative Sentiment Index has hit its most extreme positive level for the past 145 trading hours at 1.65436, it suggests that the USDCAD could be trending downwards

Currently, price is approaching your take profit level at 1.25274.
I have identified a higher support level at 1.27332. It is a horizontal swing low support, with a 76.4% Fibonacci retracement and 100% Fibonacci extension. Looking forward to seeing how things develop.

Please have a look at our idea and we would like to hear what you think:


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picatris FXCM-EDU
@FXCM-EDU, Thanks for the thumbs up. The trader's sentiment is a great tool. I've used it in the past and generally it makes a lot of sense. The higher support of 1.2733 is a good bet as it was a local low and and I would assume the downward trend may stall a bit around that level. Looks like your approach is consistent with mine!

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