Hi Traders! USDCAD forecast update and follow up is here. On July 1st I shared this USDCAD Technical Analysis And Forecast post in my 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 Traders Academy Club. Spoiler alert – free memberships are available!
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Now let’s summarize the idea first:
USDCAD D1(Daily) Chart Analysis – Bearish Hidden Divergence, Parabolic Sar
On the daily chart, the price which is moving higher has created a bearish hidden divergence between the first high that has formed on 6th May 2020 and the second high that has formed on 26th June 2020 based on the histogram of the MACD indicator which we may consider as evidence of bearish pressure. In addition to this based on the Parabolic Sar the dot is above the price which we may consider as another evidence of bearish pressure. We may now move down to lower timeframes and see if we can find evidences supporting this bearish view.
USDCAD H4(4 Hours) Chart Analysis – Strong Resistance Zone, Bearish Divergence, Uptrend Line Breakout, ADX Indicator
On the H4 chart, we have a strong resistance zone that has formed based on the 61.8%(1.37146) fibonacci expansion level of the first wave. The price which was moving higher reached this strong resistance zone respected it, moved lower and broke below the most recent uptrend line. We also had a bearish divergence that has formed between the first high that has formed on 15th June 2020 and the second high that has formed on 26th June 2020 based on the moving averages of the MACD indicator. We may consider these as evidences of bearish pressure. In addition to this, the ADX indicator gave bearish signal at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bearish pressure. So the bottom line here is that the H4 chart has evidences supporting the bearish view.
USDCAD H1(1 Hour) Chart Analysis – Bearish Trend Pattern
On the H1 chart, the price which is moving lower has created a bearish trend pattern in the form of three lower lows, lower highs which we may consider as evidence of bearish pressure. So based on all these my view is bearish here and I expect the price to continue lower further after pullbacks.
USDCAD H1(1 Hour) Chart Current Scenario
Based on the above-mentioned analysis my view was bearish here and I expected the price to continue lower further after pullbacks. On the H1 chart, the pullback that I was looking for happened, and then the price moved lower exactly as I expected delivering 100+ pips move before it was blocked by a bullish divergence.
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. 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 majority of the times 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”.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
