The analysis of the USD/CAD currency pair reveals a current upward movement, although it lacks the strength seen in previous trends. While the pair is experiencing growth today, the price is not aggressively breaking through new highs. This behavior suggests that the upward momentum may soon stall, and a reversal to the downside could be imminent.
Last week, the USD/CAD pair successfully broke through multiple resistance levels, including a crucial threshold. Buyers have pushed the price higher, but the momentum appears to be weakening, raising concerns about the sustainability of this upward trend. Given this context, I opted to open a sell position at today’s high, believing that the peak has likely been reached and that the price will gradually shift downward. Typically, after a robust bullish trend, a pullback occurs, and I anticipate that this will happen soon.
On the hourly chart, the price has been moving within an ascending channel, but there are signs of a downward turn. I expect the pair to continue declining towards the lower boundary of this channel, which is around the 1.3781 level. Upon reaching this point, a potential reversal could occur, leading the price back towards the upper boundary of the channel, also aligning with the 1.3781 level.
At this stage, I would not recommend risking a buy position, as the current conditions suggest bearish momentum. However, if the price pulls back closer to 1.3615 and the bearish pressure eases, I might consider entering a buy trade. In this scenario, I would set a stop loss at 91 points, with a target profit of 271 points.
For more aggressive traders, there is a possibility for upward movement if the bulls manage to break through the resistance zone of 1.3893 to 1.3958. However, I prefer a more conservative strategy and am hesitant to take on that risk at this time.
In summary, while the USD/CAD pair is currently in an upward movement, the weakening momentum suggests a potential reversal. Monitoring price action closely will be critical, as any signs of a downturn could present trading opportunities. With the market conditions as they are, a cautious approach seems prudent.
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