By: John Ursus
Timeframe: W1
Recommendation: Short Position
Entry Zone: 1.1425 – 1.1500
Take Profit Zone: 1.0600 – 1.0700
Stop Loss Zone: 1.1700 – 1.1800
The USDCAD has rallied over the past twenty-eight trading months as weakness in the Canadian Dollar met strength in the US Dollar. The correction took this currency pair from an intra-day low of 0.9632 to an intra-day high of 1.1475 from where the USDCAD has started to lose its upward momentum. This currency pair may experience a sharp profit taking sell-off amid extreme overbought conditions.
The sharp rally took the USDCAD well above its Fibonacci Retracement Fan from where a pullback is expected. Last week’s candlestick formation formed an inverted hammer which may have marked the end of the uptrend. Forex traders are advised to spread their entries over a 75 pips range between 1.1425 and 1.1500. The upward potential appears to be rather limited while the downside potential remains very attractive.
