Hi Traders! USDCAD short term forecast follow up and update is here. On March 7th 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 higher has reached a strong resistance zone, respected it and bounced lower from this zone. Currently, we have a strong bearish momentum and based on the Heikin Ashi candles we can see that, we have strong bearish bodies in downward-moving market conditions so it basically reflects a bearish environment. In addition to this, the price has also created lower lows based on the MACD indicator, which is another sign of gaining momentum toward the bearish side. Also, 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 value over 25 which we may consider as yet another evidence of bearish pressure. So the bottom line here is that, everything looks good here as well 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 H1(1 Hour) Chart Current Scenario
In USDCAD, on the H1 chart, based on the above mentioned analysis my short term view was bearish in this pair and I was expecting the price to move lower further after pullbacks until the strong resistance zone holds. The price moved as per the plan here. After the lower lows, the pullback that I was looking for happened and then the price moved lower further as I expected it to and delivered a nice move to downside as you can see in the image below!
On the M15 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a continuing bearish divergence between the first high formed at 1.35224 and the second high which formed at 1.35245 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 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 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.
