Bullish Flag on USD/CAD - Fully Explained Situation
Today we will analyze the corrective pattern that is forming in USD/CAD at the 4H Timeframe.
🔸Before focusing on the pattern that is forming in the short term, we must take into account the context in which this situation occurs.
🔸As we can see, the price is bouncing in a Weekly chart Support Zone, and trying to penetrate the bearish channel to the upside.
🔸Given this context, we consider that it is optimal to look for a bullish setup to try to grab the base of the potential rise.
🔸Referring to the corrective pattern of the 4H chart, we see that it corrects the previous bullish momentum, and we can draw a flag pattern.
Here we leave a theoretical vision of what a flag pattern looks like so that you can compare it with the real situation in USD/CAD:
🔸The price is testing the lower trend line, so it is not 100% confirmed yet, but we are anticipating a potential move.
🔸At this precise moment it is NOT advisable to make any decisions regarding this trade, and stay on the sidelines by observing carefully. What we are waiting for is that the price breaks the pattern to the upside, and only then can we say that it is valid to take a trade.
🔸This structure offers us a very good risk-benefit ratio, and allows us to position our stop loss below the structure, which implies that it is in a safe place, behind the demand zone.
🔸Before focusing on the pattern that is forming in the short term, we must take into account the context in which this situation occurs.
🔸As we can see, the price is bouncing in a Weekly chart Support Zone, and trying to penetrate the bearish channel to the upside.
🔸Given this context, we consider that it is optimal to look for a bullish setup to try to grab the base of the potential rise.
🔸Referring to the corrective pattern of the 4H chart, we see that it corrects the previous bullish momentum, and we can draw a flag pattern.
Here we leave a theoretical vision of what a flag pattern looks like so that you can compare it with the real situation in USD/CAD:
🔸The price is testing the lower trend line, so it is not 100% confirmed yet, but we are anticipating a potential move.
🔸At this precise moment it is NOT advisable to make any decisions regarding this trade, and stay on the sidelines by observing carefully. What we are waiting for is that the price breaks the pattern to the upside, and only then can we say that it is valid to take a trade.
🔸This structure offers us a very good risk-benefit ratio, and allows us to position our stop loss below the structure, which implies that it is in a safe place, behind the demand zone.