USD/CAD Price Forecast: Hanging Man reversal candlestick might signal important pivot

USD/CAD has formed a candlestick reversal pattern on the daily chart.
This could mark an important reversal in the short-term trend.

Joaquin Monfort FXStreet

USD/CAD is falling on Thursday, trading almost half a percentage point lower on the day, and forming a long red candlestick (see chart below).

USD/CAD Daily Chart

On Wednesday USD/CAD formed a bearish Hanging Man Japanese candlestick pattern (blue rectangle on chart above). This pattern forms when price rises to a new high, pulls back down during the same day, then recovers again and closes the day just below where it opened. If it is followed by a red down day, a short-term bearish reversal is confirmed.

Thursday’s red down day so far appears to be confirming the Hanging Man. It may be highlighting a pivot point, or reversal of the rally that began at the August 28 low.

USD/CAD is oscillating within a larger range and the overall structure of the move down from the range high appears to conform to that of an ABC pattern, or “Measured Move”. These patterns are like large zig-zags with wave C usually reaching a similar length to wave A. If USD/CAD really is forming an ABC pattern then C should end within the zone of the range lows (orange shaded rectangle on chart above).

It is also possible the move could reach a point where wave C is a Fibonacci 0.618 ratio of the length of wave A. If so it would probably reach 1.3326.

If Thursday ends as a bearish down day it will provide confirmation of an extension lower towards the aforesaid targets. A break below 1.3466 (September 6 low) would provide additional bearish confirmation.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.