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Short-term trading idea: FX USD/CAD – bear speculation: break in the trend line

Trading opportunities for currency pair: there’s been a break in the trend line on the daily graph. Despite the hammer that’s formed, the USD/CAD rate is expected to fall to 1.2815/20 by 8th February, 2017.

There is a risk that the rate will head up in accordance with the hammer candle formation. Due to this it isn’t worth rushing to sell the dollar. Monday is a holiday in the US, so we may see a false movement upwards. Leave the daily stochastic to off load and switch into the sell zone. It would be ideal if the price keeps trading below the trend line. If it closes above it we can expect a renewed weakening of the dollar. Before any sharp fall, a flat in the range of the hammer should form.

Current situation

The USD/CAD has fallen from its 1.3599 to 1.3029. It’s worth noting that a double top has formed near 1.36. A break in the trend would confirm the formation.

The departure from channel 1 took place the day after Trump spoke. A break in the trend line and a fall of the rate to below the 1.3080 minimum from 14th December, 2016 has forced me to make a forecast for a drop to 1.2815/29 by 8th February, 2017.

Due to the hammer it was difficult to make such a decision. The hammer is a bull signal, but it doesn’t come off all the time. For it to be cancelled, the price should close off the hammer’s shade within three days.

The USD/CAD rate has restored from 1.2416 to 1.3588 via a W-shaped pattern. I’m not excluding a large W-shaped pattern forming from 1.3588. Due to this, there’s no point rushing to sell dollar. Monday is a day off for the US, so we could see a false upwards movement.

Now to why I chose 8th February for the forming of the minimum. During the upward correction, the minimums formed in 40 days. If we add 40 days to 14th December we end up on 8th February. If the dollar doesn’t make it to 1.2820, according to my data an inversion should coincide with the date.

Graph from 2016 to see the full set up for the USD/CAD on the daily graph


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