USD/CAD Price Analysis: Bulls are stepping in and eye significant correction

USD/CAD bulls are moving in at a discount to target a correction.
The Daily M-formation is compelling in this regard.

Ross J Burland FXStreet

The price has fallen below the trendline support, met horizontal support, rallied into a test of the old lows and has left behind an M-formation in the subsequent drop into the demand area again.

USD/CAD daily chart

The M-formation is a reversion pattern so the price would now be expected to revert back to at least the neckline of the pattern:

USD/CAD H1 chart

From an hourly perspective, the bulls will be on the lookout for a correction higher to the neckline and for a bullish structure from which to engage. The price is starting to carve out a bullish structure in the form of accumulation. The 61.8% ratio has a confluence of an area of liquidity that would be expected to draw in the price in order to mitigate the imbalance of the price drop. This could serve as an area of resistance on the way to the neckline target.

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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