More choppy trade in $/cad since the Oct low at 1.0210. Still appear to be forming a large pennant/triangle over that time, generally seen as a “continuation” pattern, and suggesting an eventual downside resolution. However, these patterns break down into 5 legs, leaving open scope for further wide ranging within the pattern first (see “ideal” scenario in red on daily chart below). Reached the short area from the Feb 22nd email at 1.0520, and the market has since reversed lower. Given the risk for more wide ranging and the market approaching the base of the possible pennant (limited potential), would use an aggressive stop on a break above the week long bearish trendline (currently at 1.0520, but falling very rapidly) to compensate (and maintain a good overall risk/reward). Note too, would stop on an intraday break given the tendency for trade within these patterns to be volatile (risk for upside acceleration on break above). Nearby support is seen at 1.0300/15 (earlier low).

Longer term, as mentioned above there is scope for further wide ranging but with an eventual downside resolution of the multi-month pennant after (see “ideal” scenario in red on weekly chart/2nd chart below). Switched the longer term bias back to the bearish side on Feb 12th at 1.0525 and for now, would maintain that bias. Note however, that these patterns often resolve sharply, spiking lower and before completing a more important bottom. Don’t want to get too far ahead of ourselves, but something to be aware if this longer term pennant/triangle pattern does indeed play out. Key longer term resistance is at the ceiling of the pennant (currently at 1.0750).

chart 1

chart 2