FXstreet.com (San Francisco) - After falling to 2-week lows and finding a base in the 0.9735 price zone, USD/CAD is back trading around the 0.9795 mark ahead of the closing bell in New York.

Worthy of note, the mentioned price action follows a modified Hikkake pattern that was printed on the daily chart, which developed earlier in the week. On Wednesday, USD/CAD broke above the 0.9850 resistance level after an inside bar formed on the previous day. On Thursday, price retreated and managed to close sharply lower to create a Hikkake pattern, a pattern that can signal trend reversals as well as continuations within a trend.

The pattern in question also formed in an area of dynamic resistance and within a bearish trend bias: The 55-day EMA at 0.9890 provided resistance, as did a descending trendline drawn from the peak of June 28 to that of July 25. The market is also printing lower highs and lower lows, all of which suggests that USD/CAD may be poised for a deeper correction in the week ahead.

Hikkake patterns are common technical price action signals made popular by Daniel Chesler, CMT, founder of Chesler Analytics.