Descending triangle lower limit engulfed...
USD/CAD:
Following four months of growth, real gross domestic product for Canada was essentially unchanged in July as a decline in goods-producing industries was offset by an increase in services-producing industries, according to Statistics Canada on Tuesday. This set the USD/CAD on a northerly trajectory, though was a short-lived move, topping at 1.3289 on the back of dismal US manufacturing data.
H4 technical structure has the candles trading beneath an important level of support at 1.3233. As reported in recent technical research, since September 19, the H4 candles have been carving out either a bullish flag (1.3310/1.3242) or a potential descending triangle formation, with support sited at 1.3233. H4 supports to be aware of beyond the said ranges can be seen at the 1.32 handle and nearby August’s opening level at 1.3187. Overhead, we have the 1.33 handle and September’s opening level at 1.3314 to contend with.
Looking at weekly price, the pair trades around the lower limits of last week’s range, which formed an inside bearish candle formation. Resistance is fixed at the 2017 yearly opening level drawn from 1.3434, closely lagged by trend line support-turned resistance extended from the low 1.2247. To the downside, the 1.3016 July 15 low represents potential support, followed by a Quasimodo formation at 1.2887. Daily action extended its presence beneath the 50-day SMA (blue – 1.3246), likely drawing eyes to support coming in at 1.3136.
Areas of consideration:
Having seen price action on the H4 timeframe close beneath support at 1.3233, the lower boundary of a descending triangle formation, this is considered a bearish signal to short the pattern, targeting 1.3168 (black arrows), implying a move beyond 1.32/1.3187.
A sell at current price is an idea, with protective stop-loss orders plotted above the upper limit of the descending triangle. This is a large stop and limits risk/reward considerably. An alternative is to wait and see if the H4 candles retest 1.3233 and attempt to fade the level, preferably on the back of a bearish candlestick formation (entry and risk can be decided according to this pattern).
Following four months of growth, real gross domestic product for Canada was essentially unchanged in July as a decline in goods-producing industries was offset by an increase in services-producing industries, according to Statistics Canada on Tuesday. This set the USD/CAD on a northerly trajectory, though was a short-lived move, topping at 1.3289 on the back of dismal US manufacturing data.
H4 technical structure has the candles trading beneath an important level of support at 1.3233. As reported in recent technical research, since September 19, the H4 candles have been carving out either a bullish flag (1.3310/1.3242) or a potential descending triangle formation, with support sited at 1.3233. H4 supports to be aware of beyond the said ranges can be seen at the 1.32 handle and nearby August’s opening level at 1.3187. Overhead, we have the 1.33 handle and September’s opening level at 1.3314 to contend with.
Looking at weekly price, the pair trades around the lower limits of last week’s range, which formed an inside bearish candle formation. Resistance is fixed at the 2017 yearly opening level drawn from 1.3434, closely lagged by trend line support-turned resistance extended from the low 1.2247. To the downside, the 1.3016 July 15 low represents potential support, followed by a Quasimodo formation at 1.2887. Daily action extended its presence beneath the 50-day SMA (blue – 1.3246), likely drawing eyes to support coming in at 1.3136.
Areas of consideration:
Having seen price action on the H4 timeframe close beneath support at 1.3233, the lower boundary of a descending triangle formation, this is considered a bearish signal to short the pattern, targeting 1.3168 (black arrows), implying a move beyond 1.32/1.3187.
A sell at current price is an idea, with protective stop-loss orders plotted above the upper limit of the descending triangle. This is a large stop and limits risk/reward considerably. An alternative is to wait and see if the H4 candles retest 1.3233 and attempt to fade the level, preferably on the back of a bearish candlestick formation (entry and risk can be decided according to this pattern).
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