USD/CAD bounces off a key long-term resistance

We’ve spotted a great selling opportunity on the USDCAD and it’s a great occasion for both the mid and long-term. First, let me show you the big picture and the handsome price action that can be seen on a weekly chart.

So, the main thing on the weekly chart is that the price is in a long-term down-trend. Most recently, we were in the bullish correction but it doesn’t change the long-term mood. A correction managed to test a key resistance on a psychological barrier of 1.3 (yellow). It was a crucial level for the past four years and it is still crucial now.

1.3 is additionally in the same place as the 38,2 % Fibonacci, which only strengthens this area. USDCAD tested that resistance twice and both of those times were unsuccessful. That creates a double top formation.

Interestingly, if we look closer, the second top is in the same time a smaller Head and Shoulders pattern! This pattern is already up and running as the USDCAD managed to break its neckline. With this, we have a sell signal on both time horizons: mid-term and the long-term. A potential target is on the 23,6% Fibo and the lower line of the wedge. With all that, chances that we will get there are quite high.