USDCAD: Will History Repeat?

·    October 18, 2019

·      October 18, 2019

·    October 18, 2019

August 28 was the last time I wrote about USDCAD.

And after nearly two months, the pair has moved just 150 pips lower.

The lack of movement is one reason I haven’t discussed USDCAD lately.

My recent lack of interest in the pair also stems from the fact that USDCAD has yet to break free from the terminal pattern I discussed nearly two months ago.

However, this week’s price action may have changed all of that.

But before we get to that, I want to point out a few things.

1. Two channels in play

Do you remember the two channels below from August 28?

Notice how the USDCAD has been trending inside the larger descending channel since July 2015.

The smaller ascending channel, on the other hand, started to materialize in September 2017.

The intersection of ascending channel support and descending channel resistance form a terminal formation we can use to our advantage.

USDCADWeekly2 New
USDCAD descending and ascending channels

2. Will history repeat?

This isn’t the first time the USDCAD has formed an ascending channel within the broader descending one.

The pattern that developed between June 2016 and June 2017 triggered a 1,100+ pip selloff.

Notice too how that decline bottomed in September 2017, which helped develop the larger four-year pattern.

USDCADWeekly4 New
Previous USDCAD breakdown

3. Swing highs and lows

What I’m about to share with you is my favorite way to evaluate trend strength.

It’s also incredibly handy for spotting potential breakouts early.

And best of all, it only takes a few circles on a chart, which is something anyone can do.

Notice how USDCAD has started to carve lower highs since December of last year. This comes after fourteen months of higher highs.

Also, that lower low this past July was the first since September 2017.

All of this points to a weakening trend that could break channel support over the next few sessions.

USDCADWeekly3 New
USDCAD swing highs and lows

If the USDCAD can confirm a daily and preferably a weekly close below support around 1.3140, we could see this rally begin to unwind.

My first target for a move lower is just above 1.3000.

A close below the 1.3000 handle would expose the 1.2870 area, which is also the 50% retracement of the September 2017 to December 2018 range.

Just remember that there are no guarantees.

As appealing as today’s commentary may be, there’s always the chance that a move lower from USDCAD turns out to be a bear trap.

That said, it’s going to take a higher high from USDCAD combined with a close above the 1.3400 area for me to reverse my bearish outlook for the pair.

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USDCADWeekly New
USDCAD pending breakdown and targets

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  2. You didn’t mention the Canadian Election on Monday. As far as this pair is concerned, if the Liberals win, this pair will likely run up to the larger descending channel border. From there, a trader may be able to short it back down to where it is now. If the Conservatives win, this pair will easily move lower. Have a Sell Stop below the current price on Monday. Cheers.

  3. A lot of thank’s for the analysis Mr Bennett. In addition to that if you zoom in your find that there is another pattern in play. The horizontal channel, or rectangle pattern. Support is it at 1.3140, acted on July 31, then Sept 10 and yesterday and is about to be broken today. Resistance is at 1.3340.

  4. Hi Bennet,

    Why are you sharing this valuable information for Free? I have started following you long time ago and I was ignoring your mails. I had so called mentor and I lost big time and he scammed me big time all my hard earned cash gone. I am broke now and I went back to Demo account and started paying attention to your emails, I have doubled my Demo account and most important Forex started to make sense. Once I am back on my feet again, I will definitely join your membership, I guess you teach about entries and how to minimize losses.

    God bless you abundantly and give you more strength, many thanks sir.

    1. Wow, that’s great to hear, Klaas! Thanks for sharing.

      Members get a lot more such as videos with every post (including today’s USDCAD post), access to dozens of forums, direct access to me, etc.

  5. Thanks my master one more trad setup share, GOD bless you, your last 4 videos is change my life, main point is confluence,S/R/Trend line then see your trading rule, pin bar or more, in this trad same your secrets tips and weekly M pattern is crossed last week, bro you are the master in forex trading

  6. Thank you Justin! I believe in Technical analysis as it has worked perfectly well in past. Another example was GBP, there was a lot of uncertainty with Brexit but in the end it was TA that won as opposed to fundamentals. It had reached the bottom 3rd Sept and PA (price action) played beautiful from the pin bar of that day. Even after “deal” the pair is just carrying on as usual with no farce just following TA. I believe the USDCAD will be no different even with elections, there may be some price spikes intraday but in the end it’ll be TA (technical analysis) that will win. So thank you for bringing to our attention.

  7. Cảm ơn thầy.USDCAD đã đóng cửa dưới 1.3140 rồi,sang tuần chúng ta sẽ có lệnh sell,vậy stop loss chúng ta nên đặt ở đâu thưa thầy?

  8. I am living in Asian country. so your membership charges are high. pls would be reduce it?. or can you arrange another package suite for us.

  9. USD is overbought on many pairs… it is too strong and must correct. I think your analysis will prove to be 90% correct here (only 10% chance this will be incorrect). Definitely a Sell!

  10. How do you deal with high impact news? Generally (depending on the pair) my SL is around 30 to 50 pips, yet often this is still not enough to ensure a buffer for high volatility news. Any chance you could do a video on this sometime?

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