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.

Ross J Burland FXStreet

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.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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