USD/CAD is one of the pairs I am monitoring for a trade signal confirmation. The price has been trading in a sideways range and recently pushed towards the top of the range.
USD/CAD Trade Setup: Short on a Break Below 1.3255
RSI hit the overbought area and retreated as the price showed declining upside momentum at the 200-day simple moving average.
The pair is also near the top of the sideways range, just below the range key resistance at the 1.3350 area.
Last Friday, the price formed a shooting star. I am not taking this shooting star too seriously as it happened following a few days of sideways movement, instead of a clear directional up move. (To know more about the key reversal candlestick patterns, check out my favorite Forex reversal candlesticks)
However, a break below the 1.3255 level may lead to a bearish reversal within the context of the overall sideways trend. As it’s a possible short-term support level.
The support area around 1.3255 is clearer on the 8 and four-hour charts.
I will be watching for an 8-hour candle or two 4-hour candles to close below 1.3255 -that would also take the two short-term rising trend lines- to target the 1.3135 area.
Trade with Care