IFC Markets - Analytics

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Technical Analysis USDCAD : 2015-06-08

Bearish divergence

Let us consider the USD/CAD currenccy pair on the H4 time frame. The price has entered the consolidation zone, which may result in breaching the support line at 1.23636. The unclear Donchian Channel direction confirms the consolidation. However, even as we speak we see indications of a new trend, assured by the H4 line crossing and the ParabolicSar indicator turning. Meanwhile, the RSI-Bars bearish divergence appears to be the most important signal. The ultimate momentum is expected after the Building Permits (MoM) release in Canada at 14:30 CET.

USD/CAD

The bearish momentum may continue after breaking out a fractal at 1.23636. This mark is confirmed by the Donchian Channel lower boundary as well. It is highly probable that the support line breach will engender a movement, which range will be determined by the side channel height, i.e. above 100 points. Conservative traders are recommended to pay attention to the RSI-Bars oscillator. Its general direction confirms the divergence. We suggest that it would be better to wait until the 37% mark is crossed to be sure about the downward momentum. It is very likely to happen after Building Permits are published. A stop loss may be placed at 1.25595 at the resistance line, which is confirmed by the Donchian channel upper boundary, the fractal, the H4 trend line and Parabolic historical data. To be noted, after reaching the trend line, the price formed the equilibrium pattern, followed by the descending movement. The pattern is marked with yellow. After pending order activation the stop loss is supposed to be moved every four for hours near the next fractal low. Thus, we are changing the probable profit/loss ratio to the breakeven point.

 

Position Sell
Sell stop below 1.23636
Stop loss above 1.25595


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