USDCAD Forms Double Bottom Pattern
Will USDCAD start to retrace?
The current downtrend could be about to turn as the price approaches a major swing level.
The double bottom pattern could be a signal of a change in trend.
Watch the video to find out more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, We’re going to take a look at the USD/CAD as prices have continued to push to the downside, but it’s at a key-support level right now.
So, if we look at this weekly timeframe – we’ll zoom in a little bit and change this to a support line – 128 is the key-level here on USD/CAD. We can see recently, that the price tested this back in 2018 and the market rallied from this level, through here. The price is now back down at this level. Now, we’re still in the process of watching out for those US Dollar selling opportunities because the US Dollar is typically weak until the end of December. We’re still expecting the market to drop a little bit, but what we can see here is the potential for the market to bounce slightly.
So, what we’re looking for is for the retracement phase to then look for the trend continuation move. So, we can see, here on the weekly, is a very nice big bearish candlestick into the level.
Now, we’re going into the daily timeframe and we can see that the market is in that impulse phase. So, we talked about this before where the market has that retracement move, then we had that nice impulse phase, and now we’re in that moment.
Now, what I like to do in these moments is look at the four-hour trend because typically – let me get rid of these moving averages for a second – when the daily impulses to the downside, we get a trend on the four-hour timeframe. When we start seeing a retracement phase, we get a higher high being formed, we then get an impulse phase where the market, four-hour trend is down.
Now, look at what’s happening down here. The market is starting to form a double bottom pattern, so we can assume, here, that we’re at a big level. The market is impulsing to the downside, and it has been for a while now. We’re at the key-supporting point. Could this double bottom pattern show us that there is potential for the US Dollar to retrace? And especially, USD/CAD to potentially retrace backward?
So there are two ways you can trade the market in these scenarios, through here.
One way is by looking at the impulse. Where do we expect the impulse to end? And where would we expect the retracement to pull back?
So, if I were to say: “I want to be a short seller of USD/CAD in line with the trend”, I would likely look at this area around 1.3 down to 1.2950 for short opportunities because those previous structure lows act as resistance when the price comes back to it.
So, we can look at it and expect the market to pull back to this area and we see the market break trend on the four-hour timeframe, we could look for a short-term long opportunity into this level before seeing the overall move down.
So, keep an eye on USD/CAD, it’s in potential retracement territory. What we’re going to do is set some alerts above this height, which is around 1.2830.
If the market breaks and closes above this area in the four-hour timeframe, look for the market to change cycle, look for the pullback, look to trade long on some short term opportunities in order to trade the trend opportunity up at 1.2950.
Thanks for watching this video and I’ll speak to you soon.
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