USD/CAD appears to be breaking lower from a symmetrical triangle pattern, with bears potentially taking control after a period of consolidation near the 1.4400 handle.
Let’s check out these key inflection points to watch on the 4-hour time frame:
USD/CAD 4-hour Forex Chart by TradingView
USD/CAD has been showing signs of weakness after consolidating near monthly R1 pivot resistance (1.4538), with the latest price action suggesting bears may be ready to take control. This technical setup comes as holiday trading conditions wind down and traders potentially reassess positions heading into the new year.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Looking at the technicals, price has formed a symmetrical triangle pattern over the past week, with the market currently starting to break to the downside. This break also correlates with a rejection of the monthly R1 pivot resistance (1.4538), suggesting longer-term technical sellers may be starting to join the New Year party.
The next major area of interest below market sits at a strong confluence of technical arguments around 1.4150 – 1.4200. This zone includes rising moving averages, Fibonacci support levels, and a major psychological level that previously acted as resistance in early December. With a daily ATR of around 80 pips, this area could draw in both profit takers and potential buyers looking to play the current swing uptrend.
However, if bulls manage to invalidate the current breakdown and push back above the triangle pattern, then a move back to possibly R3 (1.4538) resistance levels could be in play in the short-term.
Alternatively, if we do see a downside pullback this week in USD/CAD to the strong confluence area previously mentioned above, then that may be a better setup for the bulls to consider given the current uptrend. Bullish reversal patterns between 1.4150 – 14250 with a strong fundamental narrative/catalyst is a high quality swing setup that will likely be on the radar for traders heading into the New year.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of the few economic catalysts ahead that could disrupt this ranging behavior during the holiday period.
