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A relatively quiet start to the week as it seems all market participants have their eyes set on Wednesday’s Eurogroup meetings and Thursday’s BoE report.
That aside, USDCAD is carving out a nice pattern to keep an eye on over the next few days. The pair has started forming a wedge pattern best seen on the 4 hour chart. It’s coming off of a top that was set at the end of January, which sets a bearish tone for the pattern.
I will say, however, that I’m not a huge fan of trying to short this market given the extreme bullish momentum we’ve witnessed over the past six months. Instead I’m more interested in looking for a buying opportunity in the 1.2115 area.
This area represents the measured objective for the wedge pattern and also acted as key support and resistance between 2008 and 2009.
Summary: Watch for a break of the 4 hour wedge pattern. A move to the downside would find buying interest around the 1.2115 area, at which point we can begin looking for bullish price action. Key resistance comes in at 1.2368.