The USDCAD has rallied from its lows and formed a rising wedge formation as visible in this H4 chart. The last three candlestick patterns have formed at the top of the formation which hints that a breakdown is imminent.
MACD shows that momentum has faded during the last part of the rally. Watch out for a breakdown into bearish territory as the formation collapses. RSI has been trading in and out for extreme overbought and overbought territory while it also formed a negative divergence.
We recommend taking a short position at 0.9990 with a potential second entry level at 1.0050. Should this pair reach this level we recommend hedging the initial short position before adding to existing short positions.
Traders who wish to close this trade at a loss are advised to place their stop loss level at 1.0050. We will remain in this trade as described and never make use of stop loss levels. Place your take profit level at 0.9930.
