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    USD/CAD: C leg of large a-b-c poised to break lower

       
    USD/CAD is currently correcting back in what appears to be a large and unfinished a-b-c correction, with legs A and B probably finished, and C about to break lower.

    The pair is consolidating on a nexus of support lines between 1.2540-60 composed of the old neckline from March’s head and shoulders pattern (blue) and the old highs (black).

    Zooming in and looking at the consolidation in more detail we can see that if we place a trend-line on the current consolidation (red) it has been re-touched four times. This highlights this line as a significant level, and there is a greater possibility that this line could highlight potential weakness on the horizon; if it breaks then the pair is likely to fall more swiftly than usual.

    Initially I would look to enter at a breach of the 1.2545 level, followed by 1.2539, and eventually at a break of the important 1.2537 lows, which could signal a break lower as the C leg unfolds down to a possible target at 1.2490.

    Be ware of the strong longer-term up-trend, however: a break above the consolidation highs at 1.2566 could well signal a resumption higher to 1.2575 first and then perhaps higher.

    USDCADM30

       
    USD/CAD is currently correcting back in what appears to be a large and unfinished a-b-c correction, with legs A and B probably finished, and C about to break lower.

    The pair is consolidating on a nexus of support lines between 1.2540-60 composed of the old neckline from March’s head and shoulders pattern (blue) and the old highs (black).

    Zooming in and looking at the consolidation in more detail we can see that if we place a trend-line on the current consolidation (red) it has been re-touched four times. This highlights this line as a significant level, and there is a greater possibility that this line could highlight potential weakness on the horizon; if it breaks then the pair is likely to fall more swiftly than usual.

    Initially I would look to enter at a breach of the 1.2545 level, followed by 1.2539, and eventually at a break of the important 1.2537 lows, which could signal a break lower as the C leg unfolds down to a possible target at 1.2490.

    Be ware of the strong longer-term up-trend, however: a break above the consolidation highs at 1.2566 could well signal a resumption higher to 1.2575 first and then perhaps higher.

    USDCADM30


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