Hi Traders! USDCAD short term forecast follow-up and update is here. On January 11th I shared this “USDCAD Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, currently, we have a strong bearish momentum and the price which is moving lower has broken below a strong support zone and is holding below it, we may consider this as evidence of bearish pressure. After the breakout, this strong support zone is acting as a strong resistance zone for us. Also, the price moved lower and has broken below the last low at 1.34698 and created lower lows based on the MACD indicator, which is another sign of gaining momentum toward the bearish side. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads a value over 25 which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and I expect the price to move lower further in the short term after pullbacks until the strong resistance zone (marked in red) shown in the image below holds.
USDCAD H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis, on the H4 chart, my short-term view was bearish here and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the breakout below the strong support zone (which is acting as a strong resistance zone after the breakout), the pullback that I was looking for happened and then the price moved lower further and delivered 130+ pips move until it was blocked by a bullish divergence.
On the H1 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high formed at 1.34416 and the second high formed at 1.34569 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and provided a nice move to the downside!
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at the majority of the time and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
