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USD/CAD Confirms Bull-Flip Chart Pattern

ByThe Pattern, Price & Time Report
AuthorJames Hyerczyk
Published 05/07/2012, 05:27 AM
Updated 05/14/2017, 06:45 AM
USD/CAD
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The weekly USD CAD posted a bull-flip chart pattern last week, closing higher and reversing the weak close from the previous week. This pattern was confirmed overnight when the currency pair followed-through to the upside.

In addition, the weekly USD CAD has also formed a triangle chart pattern. The triangle chart pattern is a non-trending pattern which often indicates impending volatility. The likelihood of a volatile breakout increases as the market approaches the apex of the triangle formed by the compression of the support and resistance lines. The actual apex falls near .9884 during the last week in June and the first week in July, but the trading action suggests that traders may not wait that long before breaking out.

The main trend is down on the weekly chart because of the clearly defined lower-tops and lower-bottoms. The main trend will turn up when 1.0052 is taken out. The main range is .9406 to 1.0657. This range has created a retracement zone at 1.0032 to .9884. This zone has been holding the market in a tight range since late January. Like the triangle chart pattern, the longer the USD CAD stays bottled-up inside of this zone, the greater the likelihood of a volatile breakout.

The combination of a downtrending Gann angle and an uptrending Gann angle forms the triangle chart pattern. This week, downtrending resistance is at 1.0037 while uptrending support is at .9816. Since the downtrending Gann angle crosses the 50% retracement level in close proximity, a resistance cluster has formed at 1.0032 to 1.0037. Traders have to watch this resistance cluster carefully. The first test of this cluster is likely to attract selling, but if upside momentum is strong then it should overcome the resistance and trigger an upside breakout.

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