USDCAD dropped below its triangle, reaching a low of 1.0227 so far this morning. I did have a buy order in from last week that was executed at 1.0275 and that was stopped out at 1.0248 (-27 pips).
The question is whether this is a fakeout or breakout downward. If the latter, the potential drop is 929 pips, the width of the triangle. That would make for interesting news. Before it got there it would find strong support at 1.0139/10 (two prior touches on the daily chart) and 1.0070 (uptrend line on the weekly and monthly chart). The momentum, as represented by RSI, is fairly good. What I mean here is that it hasn’t plunged and there is some positive divergence on the hourly chart. We’re just going to have to watch and wait on this one but I take the break of the trend line seriously. Currently, it’s trying to base on the shorter term charts. A re-test of the line at 1.0275 and a turn down would definitely signal a short. Reinforcing evidence would be behavior of the USD index to below 79.51.
Here’s the daily chart:
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