USD/CAD Price Analysis: Recovery takes shape of a rising wedge
- USD/CAD prints a rising wedge bearish reversal pattern on the hourly chart.
- A breakdown would expose the recent low of 1.2928.
USD/CAD's recovery from Monday's low of 1.2928 to 1.3070 has taken the shape of a rising wedge pattern as per the hourly chart.
A rising wedge comprises converging trendlines connecting higher highs and higher lows. The converging nature of trendlines indicates weak upside momentum. As such, a breakdown is considered a sign of bearish reversal.
In this case, a breakdown would imply an en end of the corrective bounce from 1.2928 and open the doors for a re-test of that level.
However, if the pair rises above the top end of the rising wedge, the bearish pattern would be negated, and further gains toward the descending 10-day simple moving average (SMA) at 1.3105 may be seen.
That possibility cannot be ruled out, as the daily chart shows the pair closed above 1.3051 on Wednesday, confirming a bullish view put forward by Tuesday's inside day candlestick pattern.
Hourly chart
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Trend: Cautiously bullish
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
