USDCAD: Short position triggered by resistance bounce!
Updated
USDCAD has been on a steady upward trajectory since the start of October, experiencing an impressive nine consecutive bullish days. This rally has propelled the price to critical levels on both the weekly and daily charts. As the pair approaches the key resistance zone, signs of fatigue are becoming evident; the candles are shrinking in size, suggesting a waning momentum as buyers struggle to maintain control.
When examining the broader context, it becomes clear that the price has faced significant resistance at the 1.38500 level on multiple occasions, leading to sharp pullbacks in the past. This historical resistance suggests that a reaction is likely as the price nears this threshold once again. Given these dynamics, I anticipate that the market may develop at least a short-term pullback from this resistance.
If a rejection candle forms, indicating sellers stepping in, we could see the price begin to decline. This expectation aligns with the current market sentiment, where the upward momentum appears to be losing steam. However, traders should remain cautious as today is packed with economic news related to the Canadian dollar, which could introduce increased volatility into the market. This news may result in significant price swings, characterized by notable wicks in both directions as market participants react to the data.
My target for this trade is the support level at 1.36650. A retracement toward this level could provide a favorable entry point for short positions if the resistance holds firm. Monitoring the price action around the 1.38500 area will be crucial; a clear rejection here could signal a shift in momentum and open the door for potential downside movement.
In summary, while USDCAD has exhibited a strong bullish trend recently, the approach of the resistance zone at 1.38500 raises the possibility of a pullback. Traders should be vigilant for signs of rejection and prepare for the potential volatility stemming from CAD-related news, which could shape the price action significantly. A move towards 1.36650 would be a logical target for shorts, should the market react as anticipated.
When examining the broader context, it becomes clear that the price has faced significant resistance at the 1.38500 level on multiple occasions, leading to sharp pullbacks in the past. This historical resistance suggests that a reaction is likely as the price nears this threshold once again. Given these dynamics, I anticipate that the market may develop at least a short-term pullback from this resistance.
If a rejection candle forms, indicating sellers stepping in, we could see the price begin to decline. This expectation aligns with the current market sentiment, where the upward momentum appears to be losing steam. However, traders should remain cautious as today is packed with economic news related to the Canadian dollar, which could introduce increased volatility into the market. This news may result in significant price swings, characterized by notable wicks in both directions as market participants react to the data.
My target for this trade is the support level at 1.36650. A retracement toward this level could provide a favorable entry point for short positions if the resistance holds firm. Monitoring the price action around the 1.38500 area will be crucial; a clear rejection here could signal a shift in momentum and open the door for potential downside movement.
In summary, while USDCAD has exhibited a strong bullish trend recently, the approach of the resistance zone at 1.38500 raises the possibility of a pullback. Traders should be vigilant for signs of rejection and prepare for the potential volatility stemming from CAD-related news, which could shape the price action significantly. A move towards 1.36650 would be a logical target for shorts, should the market react as anticipated.
Trade closed: target reached
Target hit.
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