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.
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.