The USD/CAD pair has retreated from a recent high of 1.2896. Technically, there are two patterns in play. A triangle pattern that has broken down to allow for a lower USD is likely guided by a separate bearish head-and-shoulders signal. The latter potentially has USD/CAD looking towards its price objective around 1.2303, Benjamin Wong, Strategist at DBS bank, reports.
USD/CAD remains biased lower
“In the term, USD/CAD is pushing lower off a bearish head-and-shoulders reversal. A cursory look suggests this pattern should guide USD/CAD lower as its neckline around 1.2594 has clearly crated, validating the pattern.”
“Having a calibrated target should give us a measuring rod, as USD/CAD is teasing the weekly charts’ Kijun support at 1.2478. A textbook scenario can see USD/CAD head towards 1.2303. Concurrently, USD/CAD is also framing a triangle break.”
“Should USD skid towards the head-and-shoulders target around 1.2302, it would tap closer into the 61.8% to 76.4% Fibonacci support pane of the 1.2007-1.2949 range (that marks the USD rally from June to August, calibrating 1.2229).”
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