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Watch The Canadian Dollar

Published 08/19/2015, 10:03 AM
Updated 07/09/2023, 06:31 AM
USD/CAD
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EUR/CAD
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The Forex markets were all in trading ranges overnight and are also in trading ranges on the 60-minute charts. The Canadian dollar has the most potential for a swing trade over the next week or two. The daily chart of the EUR/CAD is in a bull channel and at the top of the trading range of the past year. It had strong breakouts in April and May and has had a 3rd push up from the May spike. This is a bull spike and channel pattern, which is a type of wedge top. It has turned down for the past 3 days, and this might be the start of at least 10 days and 2 legs down. Th downside targets are prior higher lows in the bull channel. This first one is around 1.4200, or about 200 pips lower.

The 3-day selloff is climactic on the 60-minute chart, which means that there might be a rally over the next day or two. Traders learning how to trade the markets should watch to see if any rally fails around halfway up, in the 1.4500 area. If so, the reversal back down would create a lower high major trend reversal and this is a good swing-trading setup, which could provide good Forex trading for beginners.

There is a similar pattern on the daily chart of the USD/CAD. It is in a bull channel, and it has been in a triangle for about a month. A triangle late in a bull trend is often the final bull flag. If there is a bull breakout, those trading Forex for a living will watch for the breakout to fail and reverse down. The downside target is a test of the top of the trading range from the 1st quarter around 1.28, or about 200 pips below. A triangle can be a reversal pattern without a bull breakout, but there is a 50% chance of a bull breakout coming before a reversal down. The difference between the daily charts in the EUR/CAD and the USD/CAD is that the odds are higher that the EUR/CAD will turn down from a lower high and the USD/CAD has about a 50% chance of the reversal down coming from a higher high. Obviously, this is closely related to the price of oil, which has fallen sharply. If there is a bounce at some point in the next few weeks, it would probably be related to strength in the Canadian dollar.

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