USD/CAD Ends Bullish Correction

USD/CAD Ends Bullish Correction

Today, the calendar is pretty empty, and the most important data will come from Canada, where we’ll find out the latest retail sales numbers. From March 2020 until May 2021, USD/CAD was in a deep-down trend. Since May, we’ve been experiencing a bullish correction.

A correction is shaped like a wedge, so it promotes the breakout to the downside and, consequently, a continuation of the primary bearish trend. Interestingly, most recently, the price hit the 38.2% Fibonacci level, which should never be ignored. The USD/CAD tested that level and bounced. At the same time, we tested the upper line of the wedge. Additionally, we did this for a second time this year, which opens up a possibility for a double top.

The next few weeks will be bearish for USD/CAD. This trade has a great risk-to-reward ratio, and the potential target for the current drop is on the 23.6% Fibonacci, so still far away. The negative sentiment will be canceled when the price comes back above the 38.2% Fibonacci, but chances are somewhat limited.



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