It looks like the USDCAD latest down move is finally exhausted! As you can see from the 4-hour chart I posted above, a bullish engulfing candlestick has popped up above the 1.0200 handle after the pair made a new lower low. Could this be an early signal of a push higher? If the pair does climb, it could face a lot of resistance at the 1.0500 handle, as this price level coincides nicely with the falling trend line and the 61.8% Fibonacci retracement level.
Is the cable ready to retrace? After dipping to a low of 1.4230 last month, pound sellers seem to have lost momentum, allowing the cable to climb higher. In fact, it has been edging closer and closer to that falling trend line connecting the highs of the price. Drawing some Fibs using the latest downswing revealed that the 50% retracement level is nearly in line with a broken support level around the psychological 1.4800 handle. Would this level act as resistance and send the pair back to last month’s lows?
Is that a breakout of the double bottom chart pattern I see on the AUDUSD? Hmm, I’m not too sure, as the breakout candle does not seem to convincing. The upper wick of the candle is pretty long, which signifies that the pair found a lot of sellers towards the end of the trading session. With stochastics showing overbought conditions, could traders just be fading the move up? If we see price head back below .8550, it could mean that the sellers have succeeded and move upwards was just a merely a fakeout!