USD/CAD Broken Triangle Retest

How’s it going, comdoll comrades? I’m back with a long USD/CAD trade idea for this week! Check out my plan and tell me what you think:

USD/CAD 4-hour Forex Chart

USD/CAD 4-hour Forex Chart

First up, the technicals. USD/CAD recently made an upside break from the triangle pattern on its 4-hour time frame, indicating that further rallies could be in the cards. However, dollar bulls might need a quick pullback before pushing the pair any higher so I’m thinking a retest of the triangle resistance might take place. I’ve marked my “buy zone” on the chart above, as I plan to wait for the bullish divergence to play out and for reversal candlesticks to form before setting orders.

As for fundamentals, the Fed’s recent decision to keep tapering and Yellen’s hint that a rate hike might take place around six months after asset purchases end could keep the dollar supported. Meanwhile, BOC Governor Stephen Poloz recently remarked that he wouldn’t rule out a rate cut if downside risks to inflation persist. Just check out this snapshot of major central bank biases to see the difference between the BOC and the Fed!

US economic reports have been mixed so far and the Greenback might need a set of convincingly strong figures before USD/CAD bounce could take place. I’ll be keeping close tabs on today’s durable goods orders release and tomorrow’s pending home sales data to see if the dollar can recover soon. There are no major reports lined up from Canada for the rest of the week so this pair might take its cues from US data and risk sentiment.

What do you think? Make sure you check out our risk disclosure if you’re planning on taking this one too!

Cheers,

Happy time

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  • Thank you for your good information

    • Happy Pip

      Thanks for checking out my blog!

  • John

    Did you enter? It’s deep inside your buy zone or even further down. I have no idea what triggered this, since the calendar shows no news for that time and the US session recap isn’t online yet, but CAD is rampaging right now. My NZD/CAD and AUD/CAD trades are not doing so well 🙁

    CAD bulls seem to be on the move. I’d wait for this to calm down and wait what Piponomics has to say about that, what triggered it and if it was a minor setback. Other than that, it’s a nice trade idea. I think the Dollar will strengthen in the next quarter and the recent poll has shown that other users think the same.

    • Happy Pip

      Nah, I haven’t set any orders yet coz I didn’t see any reversal candlesticks. I thought of jumping in at market when the durable goods report came in strong, but price action didn’t show any signs of a rally then. I think the move may have been mostly a result of US dollar weakness, as the bond auctions showed a flattening yield curve. CFTC data shows that traders are very bearish on CAD though so I’m still waiting for a turnaround before jumping in.

  • NAVEED

    this large triangle on 4-h chart also contain another small triangle which broke yesterday. and resistance of large triangle also broke today what do you think it is a triger of down trend or the support could be seen at the support leel of large triangle?

    • Happy Pip

      Looks like USD/CAD is bracing to test the support of the larger triangle now, let’s see how it holds up. Got US consumer data being released today and possibly a bounce from profit-taking.

  • alibabababy

    Check out the weekly chart…you may want to reconsider!

    • Happy Pip

      Yep I’ve been looking at that long-term time frame as well, just hoping to catch a quick short-term bounce though. Fortunately I decided against it because there were no confirmation signals.

  • Darcy Buckle

    I would first be looking for a buyer bar on the daily chart as price is around the right zone for a price/phase reversal. Then look at the 4 hourly for a price action entry.

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