Since 30 April 2020, the USDCAD currency pair on the 4-Hour Chart has been following an upward path, having found support at level 1.38491.
The creation of the Japanese reversal pattern of candlesticks, the Bullish Hammer, marked the very beginning of the upward bias.
The low prices attracted investors who joined the market with long positions. This pushes the Loonie up to higher rates, following a trend of higher tops and higher bottoms.
The currency pair subsequently formed a Shooting Star Pattern close to the 1.41722 resistance level. This hinted at the rally’s end and the potential start of a decline.
After applying technical analysis to the price chart, the Japanese candlestick managed to close below the 10-period Exponential Moving Average line after the Shooting Star Sequence, which also points to the downward direction bearish bias in the market.
Additionally, the Relative Strength Index Oscillator records values below the fifty line, which also reinforces the negative market sentiment.
In terms of the pair’s downward tendency, both technical indicators and the Japanese candlestick reversal trend are in agreement.
The current price is trading below the trend line upwards, which also implies that supply is greater than demand.
Three price targets were determined by applying the Fibonacci Retracement tool to the low price of the Bearish Japanese candlestick at the price of 1,40777 and dragging it to the high price of the pattern at the price of 1,41722:
- First price target of 1.39832 (200 percent)
- Second price level is 1.3887 (300 percent)
- Third pricing target is at 1.37942 (400 percent)
The first price level has been hit at the time of publishing. One should expect traders to closely track the market’s reaction at the historic main support point at 1.38491.
If both the crowd psychology and the sellers’ pressure can continue to retain market dominance and drive the currency pair of USDCAD downwards.
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