Since the beginning of May 2015, the USDCAD – US dollar-Canadian dollar pair, after a short correction, headed north to set an all-time maximum at 1.4690 6 months later.
- double top formation completed
- pin bar at the neckline
- bullish engulfing heralds a correction
A year and a half passed and the price again found itself at the level of May 2015 – 1.2060. Another 2.5 years passed and the pair’s quotations grew and the price on March 15 last year reached the value of 1.4670… It was only 20p short of the previous maximum.
The next year is a strong downtrend the price is again at the level of 2015 and 2017, forming a double top formation
Today, after the release of the US inflation data, which surprised the market a bit, as it was higher than expected and amounted to as much as 4.2% year-on-year, the USD gained against other currencies. This can also be seen on the USDCAD pair – the shape of today’s daily candle is a pin bar covering the previous 2 days.
A bullish engulfing formation was formed.
It is also noteworthy that the minimum of the pin bar is located on the neck line of the double top formation built for six years, which increases the likelihood of a change of direction on this pair. Previous such formations (marked with rectangles on the D1 chart) brought corrections with a range of up to 120p.
I see here a big chance for an upward correction. To take a BUY position we will need the confirmation of the upward breakout from the bullish engulfing formation and the change of direction on MACD.
I recommend a description of the strategy used for this analysis:
ongoing analysis https://t.me/TradewithDargo
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