USD/CAD seems to be slipping from a symmetrical triangle pattern, with bearish traders possibly gaining the upper hand following a period of consolidation close to the 1.4400 mark.
Let’s delve into the critical turning points to monitor on the 4-hour chart:
USD/CAD 4-hour Forex Chart by TradingView
USD/CAD has exhibited signs of weakening after hovering around the monthly R1 pivot resistance level at 1.4538. Recently, price movements hint at bears preparing to seize control. As the festive season trading slows down, traders might be re-evaluating their positions in anticipation of the new year.
Remember, market movements and volatility are often influenced by fundamental factors. If you haven’t examined the economic updates on the euro and the Canadian dollar, now’s the time to dive into the economic calendar and keep abreast of daily market news!
On the technical front, over the past week, we’ve seen a symmetrical triangle form, with the market now starting to swing downwards. This break aligns with a rejection of the monthly R1 pivot resistance at 1.4538, suggesting that long-term technical sellers could be entering the scene as the New Year approaches.
Looking ahead, a significant level of interest appears between 1.4150 – 1.4200. This region is supported by several technical considerations, including ascending moving averages, Fibonacci support levels, and a key psychological level, which previously acted as resistance earlier in December. With a daily average true range (ATR) of around 80 pips, this area might attract profit-takers and prospective buyers eager to capitalize on the perceived uptrend.
However, if the bulls manage to counter the current decline and push prices back above the triangle pattern, we could see a rally towards the R3 resistance level at 1.4538 in the short term.
Alternatively, if there is a downward correction in USD/CAD to the identified confluence zone, bulls might find this setup more appealing given the present uptrend. Bullish reversal patterns forming between 1.4150 – 1.4250, backed by a robust fundamental narrative or catalyst, present a promising swing setup that traders might focus on as they step into the New Year.
Regardless of which direction you decide to trade, always maintain prudent risk management and stay vigilant about upcoming economic events that might disturb market stability during the holiday season.
