Hi Traders! USDCAD short term forecast follow up and update is here. On November 9th 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 H1 chart, the price which was moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern we may expect corrections and then further continuation lower. Currently, it looks like the correction that we are looking for is happening. In addition to this, we also have a bearish divergence (supporting the H4 bearish hidden divergence) between the first high that has formed at 1.37819 and the second high that has formed at 1.38143 based on the MACD indicator which we may consider as another evidence of bearish pressure. Also, we had two strong support zones that has formed and the price which was moving lower has broken below these zones and is holding below them. Currently, these strong support zones are acting as strong resistance zones for us. Until these two strong resistance zones (marked in red) shown in the image below hold my short term view remains bearish here and I expect the price to move lower further.
USDCAD H1(1 Hour) Chart Current Scenario
In this pair my short-term view was bearish and I was expecting the price to move lower further until the two strong resistance zones hold. The price action followed my analysis exactly as I expected it to here. After the bearish trend pattern, we had a pullback and the price which was moving higher reached the first strong resistance zone, respected it and then it bounced lower from this zone and delivered 370+ pips move to the downside as you can see in the image below!
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 1.38132 and the second high, formed at 1.38536 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 were 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 fantastic 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 with the majority of the time, 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.
