USD/CAD Price Analysis: Bears lurking at key H4 resistance
|- USD/CAD bulls are in town but they face a standoff at key 4-hour resistance.
- M-formation topping pattern could lead to significant downside in coming sessions.
USD/CAD has struggled to break 1.3600 as it climbs trendline support on the daily chart but suffers a blow from the US data pivot on Monday tempering the hawkish sentiment around the Federal Reserve to start the week. USD/CAD reached a high of 1.3665 on Friday and suffered a drop of around 90 pips on Monday for the opening balance. At this juncture, bulls need to commit or face prospects of a significant correction in the coming days.
USD/CAD daily chart
The channel is valid, for the time being, so there are prospects of a move higher should the support hold. However ...
There is an M-formation topping pattern on the 4-hour chart and should the neckline hold as resistance, the bears could be encouraged to follow through:
The M-formation is a reversion pattern and hence the price is coming up to test the neckline. 1.3520 to the downside is key if the neckline were to act as resistance.
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